Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SOUTH SHIELDS EXTENSION BILL (By Order)

Consideration, as amended, deferred till Monday next.

BATH EXTENSION BILL [Lords] (By Order)

Second Reading deferred till Monday next.

CATTEWATER HARBOUR [MONEY]

Considered in Committee.

Resolved:
That, for the purposes of any Act of the present Session to confirm a Provisional Order made by the Minister of Transport under the General Pier and Harbour Act, 1861, to make provision for the removal of wrecks and for other purposes it is expedient to authorise the payment out of moneys provided by Parliament, of such sums as may be necessary to enable the Admiralty and the Minister of Transport to reimburse to the Cattewater Commissioners all or part of the expenses reasonably incurred by the said Commissioners in the exercise by the said Commissioners of powers in relation to certain vessels sunk stranded or abandoned in Cattewater Harbour."—[The Chairman of Ways and Means.]

Resolution to be reported upon Monday next.

PIER AND HARBOUR PROVISIONAL ORDER (HARTLEPOOL) BILL

Reported, without Amendment; to be read the Third time Tomorrow.

FACULTY OF HOMOEOPATHY BILL [Lords]

Reported, with Amendments (with Report on the Bill). Bill, as amended, and Report to lie upon the Table; Report to be printed.

CARLISLE EXTENSION BILL [Lords]

Reported, with Amendments (with Report on the Bill). Bill, as amended, and Report to lie upon the Table; Report to be printed.

GATESHEAD AND DISTRICT TRAMWAYS BILL [Lords]

Reported, without Amendment; to be read the Third time.

DONCASTER CORPORATION BILL [Lords]

Reported, with Amendments (with Report on the Bill). Bill, as amended, and Report to lie upon the Table; Report to be printed.

Oral Answers to Questions — TRADE AND COMMERCE

Plywood (Decontrol)

Mr. Nabarro: asked the President of the Board of Trade whether he can free plywood from control, in a similar fashion to the recent decontrol of native and imported hardwoods; and whether he will make an early statement on the subject.

The President of the Board of Trade (Mr. Harold Wilson): I presume by decontrol the hon. Gentleman means reversion to private purchase, not freeing of control over consumption. The Government has recently decided that imports of plywood from a large number of countries, excluding Finland, Russia, Sweden and dollar sources shall be handed over to private trade. The possibility of extending this list of countries will be kept under review. I shall also very shortly be freeing from consumption licensing all those types of plywood for which I am satisfied that supply is reasonably likely to meet demand.

Mr. Nabarro: Is the President of the Board of Trade aware of the very great gratification and pleasure that this measure of decontrol will give?

Major Tufton Beamish: Can the right hon. Gentleman say why Finland has been excluded, and is he aware that the exporters and the Government in that country are extremely anxious to return to the private channels of trading?

Mr. Wilson: Finland and Sweden were excluded because, under the present arrangements, all the plywood for this year had been bought by Timber Control.

Mr. Porter: Does plywood include all sorts of laminated wood?

Mr. Wilson: I should want notice of what is included.

Timber Imports

Major Fisher: asked the President of the Board of Trade how many standards of timber have been imported from Sweden this year; how many standards were imported from Sweden in the corresponding period last year; what have been the average yearly imports from Sweden since the war; and what further quantities are likely to be obtained this year from this source.

Mr. H. Wilson: I assume that the hon. Member refers to softwood and mining timber. Arrivals of softwood from Sweden in the first five months of 1949 were 35,000 standards and 45,000 standards in the same period of 1950. Arrivals of mining timber during the same periods of 1949 and 1950 were 51,500 standards and 52,200 standards respectively. Average annual arrivals of softwood from Sweden in the years 1946 to 1949 were 221,000 standards; the corresponding figure for mining timber is 67,000 standards. Further arrivals in 1950 from Sweden cannot be estimated until buying negotiations are completed.

Major Fisher: Is the right hon. Gentleman aware that we could have obtained far larger supplies of timber from this source during this year, I believe up to 250,000 standards, if we had bought in December at the price then obtaining—a price which subsequently rose? Will the Government therefore cease making the shortage of timber an excuse for the lack of houses?

Mr. Wilson: The hon. and gallant Member will be aware that the amount of timber which has come into this country from Sweden this year has been unaffected by the negotiations to which he referred, because they relate to shipments later in the year. Of course, it is a fair answer to the hon. and gallant Gentleman to say that we certainly could get an increased amount of timber provided we were prepared to pay the price asked.

Colonel Stoddart-Scott: Are we paying more for Russian timber than for the purchases from Sweden?

Mr. Wilson: There is a Question later on the Order Paper about the Russian contract.

Mr. John Cooper: Is it not a fact that, through the medium of control, the price of softwood has been kept down?

Mr. Wilson: Yes, Sir.

Mr. M. Philips Price: asked the President of the Board of Trade whether he is aware of the fact that very little timber is coming into the country although the importing season is well advanced; and whether he can hold out any hope of agreements with Baltic countries including Russia for timber imports.

Mr. Marples: asked the President of the Board of Trade what are the results of the negotiations between the Union of Soviet Socialist Republics and the Timber Control; and what quantity of softwood can be expected in 1950, and in 1951.

Sir George Harvie-Watt: asked the President of the Board of Trade what prospect there is of increased timber supplies from Finland and Scandinavia this season; and whether he will state the terms and conditions of the agreement with the Union of Soviet Socialist Republics for the export of softwood supplies to this country.

Wing-Commander Bullus: asked the President of the Board of Trade on what date this month was the contract for increased supplies of timber from the Union of Soviet Socialist Republics signed in Moscow.

Mr. H. Wilson: As the hon. and learned Member for Northwich (Mr. J. Foster) was informed last Monday, substantial contracts have been placed in North America, Yugoslavia, France, Poland and in Finland where the Finnish Sawmillers' Association have a commitment to supply 225,000 standards of softwood, approximately the quantity received in 1949. A contract with Russia was signed on 13th June for 153,000 standards of softwood for shipment this year. In addition, the Russians have an option subject to mutual agreement on specification and shipment dates for a further 50,000 standards up to 15th July. A further Russian contract signed on 10th June will provide 65–75,000 fathoms of pitwood. Negotiations with individual


shippers in Sweden and Norway continue; I have no doubt that further quantities will be purchased there, but it is impracticable at this stage to say what they will amount to. It is too early to anticipate supplies for 1951 from any of the sources I have named.

Mr. Philips Price: Does my right hon. Friend realise that we are all extremely grateful for the success of these negotiations and may I ask him, further, whether the contract with Russia for softwood timber is of a kind which will supply us with the type of timber we need for housing?

Mr. Wilson: I think it is generally agreed that timber from Russia is of the very highest quality and is much appreciated. It will include large quantities which would be suitable for joinery.

Sir G. Harvie-Watt: How does the price with Russia compare with the prices with Finland and Scandinavia generally?

Mr. Wilson: We do not usually give details of prices, but I can inform the hon. and learned Gentleman that the price being paid to Russia is lower than the price for Swedish timber.

Several Hon. Members: rose—

Mr. Speaker: The Rule is to allow those who put down the Questions to have the first chance of asking supplementaries, and that is what I am now doing. Wing-Commander Bullus.

Wing-Commander Bullus: I understood the Minister to say that the contract with Russia was signed on 10th June. Is he aware that I asked his Department a Question on Tuesday last and that I found it somewhat discouraging to be told, in their reply, that there was no further information? I read the information 24 hours later in the Press.

Mr. Wilson: The simple explanation is that that answer was given to the hon. and gallant Member between 2.30 p.m. and 3.30 p.m. in the House and that the telegram from Moscow, giving details of what had occurred, was despatched from Moscow at 4.11 p.m. on the day in question.

Mr. Paton: Can the right hon. Gentleman give the total figure represented by

all these contracts and say when the imports will begin to flow in?

Mr. Wilson: No, Sir. It would not be possible to give a total figure yet because, as I made clear, negotiations with shippers in Norway and Sweden are still continuing and there is also the question to be settled of how much timber we shall get from the dollar area.

Mr. Bossom: Would the Minister take this matter up with the Minister of Health and see whether the Government cannot increase the total of 200,000 houses which is to be the limit this year?

Mr. Wilson: On a number of occasions my right hon. Friend has explained the limiting factors with regard to houses. Timber is not the principal factor.

Major Guy Lloyd: Could the right hon. Gentleman explain, especially to this side of the House, why there was the triumphant giggle from the other side when he said that Russian prices happened to be cheaper?

Mr. Wilson: I suppose it was to compensate for the feeling of gloom on that side.

Mr. Watkinson: asked the President of the Board of Trade whether he has now secured adequate supplies of softwood timber to maintain the 1950 building programme.

Mr. Hurd: asked the President of the Board of Trade how much softwood has been purchased for the current season towards the total requirement of 1,500,000 standards; and if he is satisfied that supplies will be adequate in the next few months to meet the needs of the building trade.

Mr. Sutcliffe: asked the President of the Board of Trade if he is aware of the difficulties arising from the reduced supplies of timber available during the early months of this year; and what arrangements are being made for a substantial increase for the next six months.

Mr. H. Wilson: Our programme of softwood imports for the year makes full allowance for all essential uses of timber, and I anticipate no hold-up in the building programme from the temporary low level of stocks during the next few weeks.

Mr. Watkinson: While I quite agree that, according to the statement the right hon. Gentleman has made, he might have secured these quantities of timber, may I ask if he could assure the House that the whole trade is in hand, and that, therefore, we can expect adequate quantities of timber to reach this country to enable the building programme to be kept going?

Mr. Wilson: Yes, Sir. The prospect of supplies of timber actually coming into the country in the second half of this year seem reasonably good. The present shortage of stocks is due to the slowing up in the rate of imports from the dollar area, because of the dollar difficulties last autumn.

Mr. Hurd: Can the Minister give the answer to my Question, which was how much softwood has been purchased for the current season towards the total requirement of 1,500,000 standards which was set by his own Departmental Committee—the Keith Price Committee?

Mr. Wilson: No, Sir. I could not at the moment answer that Question, because some of the timber has been allocated to us, but contracts have not been signed for it, particularly in the case of Finland.

Mr. Sutcliffe: Can the right hon. Gentleman give an assurance that the arrears in the early months of this year will be overtaken, because in the Manchester district only 17 per cent. of the quota was received in the first four months of this year, as against 54 per cent. last year?

Mr. Wilson: We are hoping to get enough timber coming into the country next year to build up stocks to a reasonable level at their lowest point next summer.

Mr. Godfrey Nicholson: The President has implied that the 1,500,000 standards has not yet been reached. Is it not leaving it rather late, and will it not affect this year's building programme?

Mr. Wilson: The figure of 1,500,000 standards is an estimate made by a committee under the chairmanship of Sir Keith Price, but last year we got through on considerably lower figures, and the figure of 1,500,000 has not been accepted

as the minimum requirement for this country next year.

Mr. Chetwynd: May I ask my right hon. Friend whether there was any significant drain on reserve stocks, or whether they are still adequate?

Mr. Wilson: During the last few weeks, the drain on the emergency reserve stocks has been very small indeed, and it suggests that the statements made in some quarters about a shortage of timber stocks have been somewhat exaggerated.

Mr. Speaker: May I remind the House—I had to do it yesterday, and I am doing it again now—that it is forbidden for an hon. Member to walk between another hon. Member and one of the two Front Benches, the first or the second, below the Gangway, when that hon. Member is on his feet. It happened yesterday, and again just now, and I draw the attention of the House to it; it is forbidden by our Rules, and I hope that the Rule will be observed carefully

Mr. Assheton: Would the Minister agree that there is a very considerable shortage of certain sizes and lengths of timber in very many parts of the country?

Mr. Wilson: The present level of stocks in the country is small—smaller than we intend it to be next year—and I have given the reasons for it. One of the results of having small total stocks is that supplies of particular sizes in particular areas are bound to be difficult.

Silk Goods, Cyprus (Imports)

Mr. Henry Brooke: asked the President of the Board of Trade why the import of silks from Cyprus is not permitted unless they are to be re-exported.

Mr. H. Wilson: Restrictions on the importation of silk goods from all sources have been imposed because of the restrictions imposed on our own producers by a shortage of raw material. There have been no recent applications to import silk goods from Cyprus, but in the interests of developing local industries there I may say that a request for the import, without re-export condition, of a reasonable quantity of silk woven in Cyprus would be sympathetically considered.

Mr. Brooke: Is the right hon. Gentleman aware that I have in my hand a letter from his Department, dated only last month, refusing a licence for the import of silks from Cyprus unless the goods were to be re-exported?

Mr. Wilson: I think the silk trade in this country, which is subject to very strict conditions about exports, would have strong feelings if we were to allow too much in without conditions, but I have made it clear to the hon. Member that I am prepared to reconsider the question as far as Cyprus is concerned.

Air-Commodore Harvey: Is the right hon. Gentleman not in error in the statement which he has just made about exports, as the French are allowed to send to this country half a million pounds of silk a year without any obligation to re-export?

Mr. Wilson: There was no error in my statement. I am quite aware of the position with regard to France and with regard to Italy, too. As the hon. and gallant Member knows, I am meeting hon. Members on this subject very shortly.

Industrial Development, Forest of Dean

Mr. Philips Price: asked the President of the Board of Trade whether, in view of the likelihood of redundancy of miners now working in Forest of Dean mines in the course of the next five years, he is considering plans for attracting further new industries to take up surplus labour from the mines.

Mr. H. Wilson: A number of new industries have been attracted to the Forest of Dean in the post-war years and further developments are in prospect. Although unemployment is only about one-eighth of the 1938 level, my hon. Friend can rest assured that I am keeping industrial trends in this area under constant review.

Raw Cotton Commission (Trading Loss)

Mr. Nabarro: asked the President of the Board of Trade whether his attention has been drawn to the net loss of £7,356,650, excluding the sum appropriated from Reserve Fund, by the Raw Cotton Commission in respect of the

chargeable accounting period ended 31st July, 1949; and what action he proposes to take in the matter.

Mr. H. Wilson: Yes, Sir, but I do not consider that any special action is required. Paragraph 6 of the Annual Report of the Raw Cotton Commission for the year ended 31st July, 1949, shows that the major element in the loss of £7.4 million to which the hon. Member refers results from the necessity to write down stocks held on 31st July, 1949, owing to the decline at that date in replacement values. This reflects the effect of changes in world prices described in paragraph 4 of the Report and has been subsequently more than offset in the immediately following six months, when the net profit after similarly revaluing stocks was £8.7 million. Changes of this nature were expected when the Commission were set up and were required to balance their accounts on "an average of good and bad years."

Mr. Nabarro: Is not this another example of the disastrous results of the bulk purchase of raw materials? Had the Liverpool Cotton Exchange been in operation, with its traditional methods of "hedging," would not these losses have been avoided?

Mr. Wilson: If these figures are to be taken as proving what the hon. Member says, then the subsequent profit of an even greater amount should be taken as proving quite the opposite. Certainly, if the Liverpool Cotton Exchange had been in existence they would have been faced with the same difficulties in the restriction of dollars available as those with which the Raw Cotton Commission was faced.

Mr. Harrison: Is my right hon. Friend aware that the trade affected by this regulation of price by utilisation of the resources of the Cotton Commission will be considerably assisted in making long-term business contracts?

Mr. Sutcliffe: Notwithstanding what the President of the Board of Trade has said, do not these figures confirm the prevalent opinion that the accounts were held back until after the General Election?

Mr. Wilson: I was not aware that there was such a prevalent opinion, but there was certainly no question of holding them


back. They were published as soon as they were available.

Mrs. Braddock: Is my right hon. Friend aware that the working-class folk in my constituency have no desire to see the Liverpool Cotton Exchange reopened?

Mr. Nabarro: Can the President of the Board of Trade say to what extent "hedging" was practised by the Raw Cotton Commission last year?

Mr. Wilson: I suggest that the hon. Member studies the whole Report, which it would take me a long time to outline in the House this afternoon.

Mr. Nabarro: I have read the whole Report in great detail.

Nylon Stockings

Mr. Dodds: asked the President of the Board of Trade to what extent supplies of nylon stockings to the home market are showing any increase from the latest scheme which is linked with increased exports to hard currency markets.

Mr. H. Wilson: The scheme has been in operation only seven weeks and it is too soon yet to assess its effects, but the early indications are promising, and I am confident that it will result in increased exports to hard currency markets. This, in turn, will enable manufacturers to offer more stockings for sale on the home market.

Mr. Dodds: Is my right hon. Friend aware that he has made several announcements about increased supplies during the past two or three years, and it appears that they have only resulted in unlimited supplies on the London open-air and street markets at above controlled prices? Is he not aware that some women prefer nylons to food and drink, or even to husbands, while others think they are vital in order to get husbands?

Mr. Wilson: I cannot answer the last part of that question. For the last year, the supplies of nylon stockings have gone up from the annual rate of seven million pairs to 20.4 million pairs in April this year, and I am not responsible for the method of distribution.

Mr. Nigel Davies: In view of the incentive value of nylon stockings, will the

right hon. Gentleman consider abolishing all compunction on manufacturers to export to soft, as opposed to hard, currency countries?

Mr. Wilson: As the hon. Gentleman knows, there is a very strong incentive available to manufacturers to export to hard currency areas, and that, in return for it, they are entitled to put more on the home market.

Mrs. Jean Mann: Can my right hon. Friend say whether the best qualities are exported, and only the third, fourth and fifth qualities kept for the home market?

Mr. Wilson: A proportion of all qualities is available both for export and for the home market.

Mr. Yates: Can my right hon. Friend say why, while nylons appear to be in unlimited supplies in London, in provincial cities like Birmingham they cannot be obtained at all?

Cinema Newsreels

Mr. Dodds: asked the President of the Board of Trade when he expects to announce the rescinding of the Cinematograph Film (Control) Order, 1943 (S.R. & O., 1943, No. 430), thereby freeing newsreels and independent exhibitors from the conditions imposed upon them during the last war through the need to conserve film, raw, stock.

Mr. Summers: asked the President of the Board of Trade if he will now withdraw the Cinematograph Film (Control) Order, 1943, in accordance with the representations made to him on this subject.

Mr. Wilson: I would refer the hon. Members to the answer given on 20th June in reply to a Question by the hon. and learned Member for Northwich (Mr. J. Foster).

Newsprint Supplies

Mr. Hurd: asked the President of the Board of Trade how the supplies of newsprint for the present year compare with those used in 1949 and 1938.

Mr. H. Wilson: It is estimated that supplies of newsprint allocated for delivery to all home users may amount to 615,000 tons in 1950, as compared with a total usage of approximately 566,000 tons in 1949 and 1,200,000 tons in 1938–39.

Mr. Hurd: In view of the very low level at which supplies are still running, can the right hon. Gentleman say when we will come out into the open with our Canadian friends and tell them how much of our contract we are to take this year and how much we will take next year?

Mr. Wilson: The position regarding dollars for Canadian purchases this year has already been made known. There is as yet no decision on the supply of dollars for next year.

Mr. Hurd: When will that decision be taken?

Mr. Wilson: I hope it will be in the very near future.

Sisal Rope and Twine

Captain Duncan: asked the President of the Board of Trade whether he is aware that sisal ropes for fishermen have advanced in price by 13s. 6d. per cwt., and sisal trawl twine by 1½d. per lb.; and whether these advances in price have been approved by the Central Price Regulation Committee.

Mr. H. Wilson: The recent advances in prices of sisal rope and twine were due to the substantial increases in sisal prices at the beginning of the year, and were approved by the Central Price Regulation Committee. Concurrently with the advance in sisal rope prices, there was a reduction of about 10s. a cwt. in the price of manilla rope as a result of a fall in the price of raw manilla.

Captain Duncan: Is the right hon. Gentleman aware that continually increasing costs of production in the fishing industry are making it well-nigh impossible for it to be profitable, and that, unless something is done to reduce costs—because housewives will not pay beyond a certain price for their fish—the propects of the fishing industry will be really very depressing?

Mr. Wilson: I am not sure what the hon. and gallant Gentleman's question was, but I am aware, of course, of the high prices of these goods. I would remind him, however, that sisal is on a completely free market; it is not controlled in this country.

Beer (Imports)

Mr. John Grimston: asked the President of the Board of Trade what quantity

of beer has been imported into this country from Czechoslovakia in any recent period; and in what currency payment was made.

Mr. H. Wilson: Imports of beer from Czechoslovakia in January to April, 1950, were 199 bulk barrels, valued at £1,483 c.i.f. Payment was made in sterling.

New Factories, South Wales

Mr. J. Grimston: asked the President of the Board of Trade if he will make a statement on the conditions which must in future be fulfilled to obtain official sanction to build a new factory in the South Wales development area.

Mr. H. Wilson: In general, we are anxious to see built in the South Wales development area any new factory which will give permanent employment of the kind needed. The project must, of course, be certified under the Town and Country Planning Act as consistent with the proper distribution of industry, and there must be local planning consent. The grant of the building licence depends upon a number of factors including the kind of production contemplated.

Mr. Grimston: Has the attention of the Minister been drawn to a recent article in "The Times Industrial Supplement," in which it is implied that there has been a change of policy, and will he try to correct that?

Mr. Wilson: There has been no change in policy in regard to factories in the development areas, except that, over the past two years, the capital investment cuts have been applied rather less severely in those areas than elsewhere.

Mr. Assheton: Is it the case that some of these factories have now become redundant?

Mr. Wilson: In one or two cases firms found it impossible to carry on for one reason or another, generally market conditions, and are moving out. We are trying to replace them by other firms.

Mr. Grimston: Has not the Minister had his attention drawn to the particular article to which I referred, and, if not, will he look at it and consider making a statement on it?

Mr. Wilson: Yes, Sir.

Industrial Development, Irvine

Mr. Manuel: asked the President of the Board of Trade if he has made any decision for the early location of light industry in the burgh of Irvine in order to arrest the rising unemployment figures in that area.

Mr. H. Wilson: Negotiations are proceeding for the occupation of the Ministry of Supply depot at Irvine by a firm which will employ a substantial number of people. Other projects are also being examined. In these circumstances, I do not consider it is necessary at the present time to take further steps to attract more industry to this district where unemployment is lower than in most other parts of the Scottish Development Area.

Furniture Trade

Mr. Albu: asked the President of the Board of Trade whether he is aware of the growing concentration of the retail trade in furniture; and whether he will refer this matter to the Monopolies Commission.

Mr. H. Wilson: I have no evidence that the conditions to which the Monopolies and Restrictive Practices (Inquiry and Control) Act applies prevail as respects the supply of furniture.

Mr. Albu: If I submit evidence to my right hon. Friend, will he look into the matter further?

Mr. Wilson: I should be glad to look at any evidence my hon. Friend produces though, of course, I cannot anticipate my future choice of references to the Commission.

Mr. Nally: While it may be right that this matter has not yet reached the stage where it can, or ought, to be referred to the Monopolies Commission, would my right hon. Friend give an undertaking that he will keep a most careful eye upon the buying out activities which Great Universal Stores have been undertaking in the past few years?

Mr. Wilson: I am keeping a very careful eye on the whole question of furniture supplies, though my powers to deal with the kind of thing referred to by my hon. Friend are very limited.

Cotton Board (Accounts)

Mr. Sutcliffe: asked the President of the Board of Trade why so long a delay occurred before the publication of last year's accounts of the Cotton Board; and if he will expedite this year's accounts.

Mr. H. Wilson: Last year's accounts of the Cotton Board, 1948, were their first and the precise form had to be settled and certain subsidiary matters of accounting of an exceptional kind determined before the accounts could be presented. In these circumstances I do not consider that publication was unduly delayed, but I expect the second year's accounts will be available earlier.

Mr. Sutcliffe: Can the right hon. Gentleman give any idea of the month when they are likely to be available?

Mr. Wilson: We hope that the Cotton Board will submit their provisional accounts to the Board of Trade at the beginning of August this year, so that should speed up considerably the publication of the accounts.

Canadian Whisky Imports

Captain Waterhouse: asked the President of the Board of Trade how much Canadian whisky was imported into this country during the last fiscal year; and what was the cost in dollars.

Mr. H. Wilson: I regret that as imports of whisky are not separately recorded the information asked for in the first part of the Question is not available. Six thousand and ninety gallons at a cost of 27,078 Canadian dollars were, however, licensed in 1949 for import under the Token Import Scheme. Apart from this, the only whisky imported from Canada for consumption in this country is for the United States Forces, the Diplomatic Corps or as gifts sent by Canadian or American citizens to persons resident in this country, none of which involves this country in any dollar cost.

Captain Waterhouse: Can the right hon. Gentleman explain what advantage is obtained by selling good whisky to obtain dollars and using the dollars to buy less good whisky?

Mr. Wilson: The right hon. and gallant Gentleman will be aware that the figures of whisky passing in each direction are very dissimilar.

Trade and Industry (Productivity)

Mr. Dodds-Parker: asked the President of the Board of Trade why he has chosen 1947 as the base year against which to calculate relative productivity in trade and industry.

Mr. H. Wilson: I assume that the hon. Member is referring to the recent change from 1938 to 1947 as the base year of the index numbers measuring the volume of United Kingdom imports and exports. The change to a post-war year was necessary because the continued use of a system of weights based on pre-war prices would have distorted the index numbers. The year 1947 was chosen because it was the most recent post-war year for which the detailed trade figures necessary for the calculation were available at the time when the change was initiated.

Mr. Dodds-Parker: As 1947 was the worst of the post-war years, does not the President of the Board of Trade think that it would have been better to wait until the details for, say, 1948 were available rather than use as a base figures which must produce comparisons both misleading and over optimistic?

Mr. Wilson: The year 1946 was, of course, the worst of the post-war years. I agree with the hon. Gentleman that the export drive has continued to progress year by year since the end of the war but, for the reasons I have mentioned, 1947 was taken as the base year.

Mr. Peter Roberts: Why does the right hon. Gentleman want to perpetuate the disastrous record of the present Minister of Defence in the fuel industry, and the present Minister of Town and Country Planning in the Treasury? The year 1947 is not really a good year for this purpose, and why will he not consider 1948?

Mr. Wilson: I would only ask the hon. Gentleman to contemplate what the export figures for 1948, 1949, and 1950 would have been if we had not nationalised the coal mining industry.

Rayon Piece Goods (Exports to Australia)

Mr. Nally: asked the President of the Board of Trade if he will make a statement as to the present position of British rayon exports to Australia; and what action he has taken or proposes to take to draw the attention of the Australian Government to the serious consequences upon our rayon industry and upon Australian consumers of the decision to impose new duties upon rayon goods entering the Dominion.

Mr. Russell: asked the President of the Board of Trade what representations he has made to the Australian Government in connection with the recent increase of about 1,100 per cent. in the Australian customs duty on British as-well as foreign imports of rayon, which has reduced the proportionate value of the Empire preference; and what answer he has received.

Mr. H. Wilson: Exports of rayon piece goods from the United Kingdom to Australia in the first four months of 1950 amounted to £2.5 million. The United Kingdom High Commissioner in Canberra has made a formal approach to the Australian Government expressing the concern of His Majesty's Government at the increase in the British preferential tariff on rayon piece goods. We are awaiting a reply. I can assure the hon. Members that I am giving this matter the closest attention.

Mr. Nally: Would not my right hon. Friend agree that it represented a gross breach of the Ottawa Agreement when the Conservative Administration in Australia imposed this bitterly restrictive and disastrous list of duties?

Mr. Wilson: I have expressed the concern which His Majesty's Government feel about this action. I should prefer to make no further comment until we have a report from the High Commissioner.

Mr. Russell: Is not it a fact that, under the Geneva Tariff Agreement, if the Australians wanted to increase the duty on foreign rayon they had to increase the duty on British rayon at the same time? Is not that one of the reasons for this action?

Mr. Wilson: That is another, and rather hypothetical question.

Sir Ronald Ross: Is not it true that it is impossible for Australian rayon factories at present to fill the very large gap which will be left by this prohibitive tariff on British rayon?

Air-Commodore Harvey: Did the Australian Government discuss this matter with the British representative before taking action? Is not this a case where we should get even closer to our Dominions and work out the problems together rather than at Geneva?

Mr. Wilson: The hon. and gallant Gentleman is quite right. Naturally, in all these matters we want the very closest relations. I should prefer not to comment on what actually happened in this case, and the result of the report by the Australian Tariff Board, until I have received the report to which I have referred.

Anglo-American Film Agreement

Mr. Eric Fletcher: asked the President of the Board of Trade whether he is now in a position to make a statement on his recent talks with Mr. Eric Johnson for a renewal of the Anglo-American Film Agreement.

Mr. H. Wilson: Proposals which were made to the representatives of the United States film industry during their recent visit to London are now being studied in the United States. I cannot make any further statement at present.

Oral Answers to Questions — NATIONAL ASSOCIATION OF FIRE OFFICERS (COUNCIL)

Mr. Marlowe: asked the Secretary of State for the Home Department whether he is aware of the dissatisfaction of the National Association of Fire Officers with their representation on the National Joint Council set up under Section 29 of the Fire Services Act, 1947; whether he is aware of the disproportionate representation as between the officers' union and the other ranks' union; and whether he will use his powers under the Act to set up a separate National Joint Council on which the officers on the staff side can have sole representation.

The Secretary of State for the Home Department (Mr. Ede): I think the hon. and learned Member is referring to the

National Joint Council set up in pursuance of Section 17 of the Act and not appointed under Section 29; the composition, functions and method of appointment of the two Councils are quite distinct. The National Joint Council was established by the organisations representing the Fire Authorities and the members of Fire Brigades, including the National Association of Fire Officers, and the number of representatives of each organisation was agreed when the constitution was adopted; it is not appointed by me but it is recognised by me for the purposes of Section 17. The National Association of Fire Officers has expressed a desire for a separate Council for Officers, but I understand that at a recent meeting of the National Joint Council a motion to exclude officers from its scope was not carried.

Mr. Marlowe: Does the right hon. Gentleman realise that unless he takes some action, this must always be the position, because owing to the numbers involved the officers are always hopelessly out-numbered by the other ranks? As the other ranks' union is Communist dominated, does he not understand that these difficulties must continue and that it is inappropriate to a uniformed service that the officers' conditions should be dictated toy a Communist dominated other-ranks' union?

Mr. Ede: I have closely studied the history of the work of this Joint Council, and I do not think the comments made by the hon. and learned Gentleman are justified.

Oral Answers to Questions — PRISONERS, (PRESS INTERVIEWS)

Wing-Commander Bullus: asked the Secretary of State for the Home Department how far prison regulations allow reporters to interview criminal offenders detained in His Majesty's prisons.

Mr. Ede: The prison rules make no provision for representatives of the Press to interview prisoners, and it is not the practice to give such facilities.

Wing-Commander Bullus: Is the Minister aware that conversations purporting to be those of well-known prisoners were reported in a Sunday newspaper recently?

Mr. Ede: A great many strange things appear in Sunday newspapers, and I am not to be taken as accepting them. There is no possibility of a newspaper representative interviewing a prisoner unless he is one of the persons who is, in some way or other, connected with the prisoner and pays him a visit. Then it might be possible that an interview might take place, but, generally, it is impossible.

Mr. Emrys Hughes: Are there any regulations which would allow a convicted burglar, with strong views on private enterprise, to give them to the Press?

Mr. Speaker: That appears to be a rather hypothetical question.

Oral Answers to Questions — WARD BOUNDARIES, LEEDS

Mr. Kaberry: asked the Secretary of State for the Home Department what further time will yet be required to make the necessary order declaring the new municipal ward boundaries for the city of Leeds, especially having regard to the urgency of arranging polling district boundaries within such wards for both Parliamentary and municipal elections adequate for the convenience of voters.

Mr. Ede: I understand that certain minor adjustments of the proposed boundaries which have been referred to the city council are still being considered by them, but I have no reason to think that there will be much further delay.

Oral Answers to Questions — FIREMAN'S DEATH, SHEFFIELD

Mr. P. Roberts: asked the Secretary of State for the Home Department whether, in view of the death of Fireman Hill in the execution of his duty in attempting to rescue a cat in a tree near Albert Road, Sheffield, he will institute immediate inquiries into the duties of firemen for the purpose of putting some limitation on the risking of life in the helping of distressed animals.

Mr. Ede: It is, I believe, generally recognised that humanitarian services of this kind are incidental to a fireman's calling, but I agree with the hon. Member that firemen should not be expected to take any undue risk in performing such functions. I have no authority to give any directions to fire authorities on the

matter, but I am drawing their attention to it, and inviting them to consider whether they should issue any orders to the brigades for which they are responsible.

Dr. King: Can my right hon. Friend say whether adequate provision has been made for the dependants of this brave man?

Mr. Ede: There is a fixed scale of compensation.

Oral Answers to Questions — AFFILIATION ORDERS

Mr. Sorensen: asked the Secretary of State for the Home Department why the number of applications for affiliation orders in England and Wales have not been made public since 1935 although orders granted have been published; and whether the percentage of orders granted is approximately the same now as the average for the 10 years before 1935.

Mr. Ede: It was decided in 1938 to discontinue recording, for the purposes of the criminal statistics for England and Wales, the number of applications made for affiliation and other maintenance orders, the reason being to save labour. These particulars have, however, again been collected since 1st January, 1949. The number of affiliation orders made in 1949 was 83 per cent. of the total applications, the corresponding figure for the 10 years 1926 to 1935 being 80 per cent.

Mr. Sorensen: Can my right hon. Friend say whether these figures will, henceforth, be published every year?

Mr. Ede: Yes, Sir.

Oral Answers to Questions — CIVIL DEFENCE

Enrolment

Brigadier Prior-Palmer: asked the Secretary of State for the Home Department what is the present position in the country in regard to volunteers for Civil Defence duties; what was the target figure; and to what extent have those numbers been recruited.

Mr. Ede: The number of volunteers enrolled at the end of March in the Civil Defence Corps, the Auxiliary Fire Service and the National Hospital Service


Reserve was, approximately, 30,000. The next recruiting returns are not due until after the end of June, but I will communicate with the hon. and gallant Member as soon as they are available. As regards the second part of the Question, I would refer the hon. and gallant Member to the reply which I gave on 26th May go to a question by the hon. Member for Harrow, East (Mr. Ian Harvey).

Brigadier Prior-Palmer: Is the right hon. Gentleman satisfied that the situation is as it should be, and, if not, what steps does he propose to take to acquaint the country with the seriousness of the position?

Mr. Ede: No, Sir, I am not satisfied with the rate of recruiting, but, from time to time, those who have already enrolled are engaged in bringing in others. I believe that in this, as in other Services, the person who is already in, and who is interested in the matter, is the best recruiting sergeant.

Brigadier Head: Bearing in mind that the right hon. Gentleman is not satisfied with the result, has he any steps in mind to ensure that the very big discrepancy between the target and the actual results can be made less?

Mr. Ede: I was very careful not to set a target, so there is no discrepancy.

Training Grants

Brigadier Prior-Palmer: asked the Secretary of State for the Home Department what arrangements are made for provision of training grants to local authorities for Civil Defence purposes.

Mr. Ede: Approved expenditure incurred by the appropriate local authorities on training members of the Civil Defence Corps and Auxiliary Fire Service is being grant-aided at the rate of 75 per cent.

Uniforms

Brigadier Prior-Palmer: asked the Secretary of State for the Home Department whether he will consider issuing uniforms to Civil Defence recruits.

Mr. Ede: Yes, Sir. I hope it will be possible to begin issuing uniforms in the autumn.

Oral Answers to Questions — JUVENILE COURTS

Mr. Sidney Marshall: asked the Secretary of State for the Home Department whether he will consider amending the regulations so that police officers attending juvenile courts should now appear in uniform.

Mr. Ede: There are no statutory provisions requiring police officers to wear civilian clothes when on duty in juvenile courts. The matter is within the discretion of the justices, and the practice varies from court to court.

Mr. Marshall: Does not the Minister think it would be advisable to inform the courts that it is within their discretion, because I believe that in many cases they are not aware of the fact? It might be very useful to advise them that they have this discretion.

Mr. Ede: I think that the discretion is known, but, if not, I am quite sure that the hon. Gentleman's Question and this answer will draw attention to it.

Mr. Somerville Hastings: Does not my right hon. Friend agree that magistrates are much more likely to get the truth out of children who are not frightened?

Mr. Ede: Both magistrates and children vary very much.

Mr. S. Marshall: asked the Secretary of State for the Home Department whether he will consider amending the regulations so that the names of all juvenile delinquents appearing before juvenile magistrates should be made public, except in cases where, within the magistrate's discretion, such publication should not be made.

Mr. Ede: The publication of names or other identifying particulars is prohibited by Section 49 of the Children and Young Persons Act, 1933, which empowers the court or the Secretary of State to authorise publication if satisfied that it is in the interests of justice to do so. I do not consider that any change in the law is desirable.

Mr. Marshall: Does not the Minister think that if the same discretion as that allowed to police officers regarding the wearing of uniform were given to magistrates in regard to the publication of names, it would be a useful deterrent in other juvenile cases?

Mr. Ede: They have a discretion. If they think that in a particular case the cause of justice would be served by so doing, they are quite at liberty to disclose the names of the children appearing before them. It is their discretion, and, if they like, they can exercise it.

Mr. Marshall: Does not the right hon. Gentleman agree that publication of his reply will also be helpful in making them realise the discretion which they have?

Mr. Ede: I hope it will be.

Oral Answers to Questions — PUBLIC HEALTH

Atmospheric Pollution

Dr. Bantett Stross: asked the Minister of Health (1) in view of the inadequacy of the legislation relating to smoke nuisance, what steps he proposes to take to diminish atmospheric pollution and deposit which may reach, as in Stoke-on-Trent, a figure of 20 tons per square mile, per month, or more;
(2) whether he is aware of the ill-effects upon the health of the population particularly the aged, resulting from the inhalation of lung irritants due to atmospheric pollution by smoke; and what remedial measures he has in mind.

The Minister of Health (Mr. Aneurin Bevan): I am aware of the ill-effects of atmospheric pollution, but, in my view, the problem is practical rather than legal. The efforts of all concerned to secure that the best practicable means of prevention are used have already resulted in some improvement in this area in recent years, and I shall do all I can to see that these efforts are maintained.

Dr. Stross: Is my right hon. Friend aware, however, that local authorities and medical officers of health think that the maximum penalties imposed on conviction are too low, and that the legal position is such that they cannot effect the improvements they desire? Will he do something in that direction?

Mr. Bevan: It is not always desirable to have very heavy legal penalties for conditions that are sometimes physically difficult to carry out.

Mr. A. Edward Davies: When my right hon. Friend says that it is a practical

problem, is he aware that there is a shortage of alternative fuels—gas and electricity—and will he do what he can to supplement the already improved supplies?

Mr. Bevan: The shortage of gas and electricity reflects the higher purchasing power of the community.

Smokeless Fuels

Dr. Stross: asked the Minister of Health whether the type of firegrate, capable of burning smokeless fuels, and which are being supplied in many new council houses, could be installed in all houses which are reconditioned under the provisions of the 1949 Housing Act; and whether he is aware that such action would greatly assist in the abatement of smoke nuisance and atmospheric pollution.

Mr. Bevan: The answer to both parts of the Question is "Yes, Sir." I have stated in the circular on this subject that solid fuel heating appliances should be improved types.

Oral Answers to Questions — NATIONAL HEALTH SERVICE

Specialists and Consultants

Sir Hugh Lucas-Tooth: asked the Minister of Health what instructions or advice he has issued to regional hospital boards as to their policy in regard to the appointment of part-time specialists and consultants.

Mr. Bevan: I am sending the hon. Member copies of the principal memoranda on this question.

Sir H. Lucas-Tooth: Will the right hon. Gentleman say that these memoranda show that he has no prejudice against the employment of part-time specialists and consultants?

Mr. Bevan: Perhaps if the hon. Member read the memoranda that would answer his question.

Non-Teaching Hospitals (Press Advertising)

Sir H. Lucas-Tooth: asked the Minister of Health what is the cost for any convenient area of advertising in the Press for vacancies on hospital staffs.

Mr. Bevan: The total cost during 1949–50 for all non-teaching hospitals in England and Wales was, approximately, £500,000.

Sir H. Lucas-Tooth: Does not the right hon. Gentleman think it a very large sum for him to pay to newspaper proprietors? Is he not aware that, in many cases, these advertisements are almost duplications of one another with, perhaps, one word changed?

Mr. Bevan: I have already called the attention of regional hospital boards to my view that this is an excessive sum, but it must be remembered that when the service was being built up very large numbers of additional domestic servants were being recruited for the hospitals, and that advertising was necessary for that purpose.

Sir Herbert Williams: Has the Minister thought of using the Ministry of Labour for this purpose?

Mr. Bevan: It is necessary that workers should be informed that vacancies exist. For two or three years I was being pressed to increase the employment of domestic staffs in hospitals, and we succeeded in doing this. This is one of the ways of doing it.

Doctors (Status)

Mr. Oliver: asked the Minister of Health whether he is aware that doctors who were refused consultant status and graded as senior medical officers under the National Health Act have been compelled, in order to obtain posts carrying consultant status, to leave their hospitals and go to others and that the vacancies thus created have been advertised and filled not by doctors graded as senior medical officers but by consultants; and whether this practice has his approval.

Mr. Bevan: During this transitional period some posts graded for consultants are inevitably held by individuals who have been graded only as senior hospital medical officers. It must, of course, always be open to these officers to seek advertised consultant appointments at their own or other hospitals, if they think they are likely to qualify for them.

Mr. Oliver: Does not my right hon. Friend appreciate that it causes a great deal of unnecessary hardship if doctors

must move to obtain a status to which they ought to have been graded in the first place?

Mr. Bevan: On the contrary; it would cause very considerable hardship if a doctor who has already been graded as a senior medical officer could never have a chance of being regraded as a consultant.

Oral Answers to Questions — OPEN-CAST MINING, WORCESTERSHIRE

Mr. Nabarro: asked the Prime Minister whether he has considered the telegram and letter sent to him on 3rd June, 1950, by the Kidderminster and District Branch of the National Farmers' Union; and what action he proposes to take in the matters concerned.

The Prime Minister (Mr. Attlee): Yes, Sir. The hon. Member will be aware from previous answers to his questions on the subject of prospecting for open-cast coal in Worcestershire, given by the Ministers of Fuel and Power, Agriculture and Town and Country Planning, that the policy of the Government is to prove all available coal resources by systematic boring which does not damage the land to any significant extent. When the value of coal which may be obtained in any particular area is known, the most careful consideration will be given to the agricultural implications of winning it and to the effect on the beauty of the countryside.

Mr. Nabarro: Is the Prime Minister aware that the reply received from the Minister of Fuel and Power is totally unsatisfactory? Can he say how he supposes that farmers and farm workers can respond to the appeals from the Minister of Agriculture for increased food production if their land is to be sequestrated for open-cast coal mining?

The Prime Minister: I have had that reply before me. I do not think it is at all unsatisfactory. It puts the case perfectly clearly. The prospecting is to see whether the coal is there. The question of whether it is to be worked or not must take into full account agricultural and aesthetic and other considerations. I think it is perfectly obvious.

Mr. Nabarro: I do not.

Oral Answers to Questions — AGRICULTURE

Rabbits

Mr. Bossom: asked the Minister of Agriculture if he is aware that rabbits are becoming a serious pest and destroying the new young crops in Kent this year; and what steps he is taking to prevent this damage.

The Minister of Agriculture (Mr. Thomas Williams): Yes, Sir. The county agricultural executive committee are doing all they can to assist farmers in dealing with the problem, but there has been an unprecedented demand for subsidised gassing powder and there is now a general shortage of supplies. Production of this powder is being increased and arrangements have been made for another type of gassing powder to be made available where the need is greatest. A supply has been allocated to the Kent committee for use by farmers who are willing to buy it.

Mr. Bossom: While thanking the Minister for his courtesy in sending me a personal letter on this point, may I ask whether he will ask the Minister of Food not to import so many rabbits next year, thereby doing away with the livelihood of men who trapped rabbits in the past?

Mr. Williams: That hardly arises out of the Question.

Mr. Nicholson: Is the Minister aware that this has come about largely because his colleague has allowed the export of a large quantity of gassing powder to Australia? Will he do something about it?

Mr. Williams: Exports are not taking place at this moment, although there is a strong demand for it abroad.

Mr. Fernyhough: Does the Minister not think that one of the best ways of overcoming this problem would be to ease the penalties for poaching?

Mr. Walter Fletcher: Has the Minister contemplated improving the social conscience of the rabbits by nationalising them?

Mr. Turton: Can the Minister explain why his Department did not look ahead and make sufficient gassing powder available?

Mr. Williams: The hon. Member must know that my Department has been calling upon manufacturers to produce as much as they possibly can and that they have not failed to respond.

Weed Spraying Operations, Martyr Worthy

Mr. Peter Smithers: asked the Minister of Agriculture whether he is aware that an aircraft operating from his Department's experimental farm at Martyr Worthy on 24th May sprayed neighbouring private gardens with weedkiller; what was the reason for this; and what steps he is taking to prevent a recurrence of such an event.

Mr. T. Williams: Yes, Sir. The work was carried out by a private firm under contract, and they have accepted responsibility for the accidental spraying of the gardens. My Department does not itself carry out air spraying operations, but I have no doubt that the private firm in question and others engaged in the business always do their utmost to prevent occurrences of this sort.

Mr. Smithers: As my constituents do-not like having their vegetables sprayed with a weed killer from aeroplanes, will the Minister give instructions that these experiments are to be carried out well away from private gardens?

Mr. Williams: I have no power to give instructions to those who carry out the spraying.

Perishable Crops (Transport)

Sir G. Harvie-Watt: asked the Minister of Agriculture whether he has taken steps to help fruit growers in having their perishable crops transported to markets in the north in time for morning sales and so avoid deterioration and waste.

Mr. T. Williams: The transport of perishable crops is a matter for arrangement between the fruit growers and the transport agencies concerned, but I should be willing to look into any special difficulties if the hon. and learned Member will supply me with particulars.

Sir G. Harvie-Watt: Is there any prospect of getting back to the pre-war system of running special trains from


the growing districts to convey the crops to cities in the north like Manchester, Newcastle and Glasgow?

Mr. Williams: That is a question for the Minister of Transport.

Dorset Wool (Prices)

Mr. Wingfield Digby: asked the Minister of Agriculture what price was paid per lb. by his Department in 1949 for Dorset Down Wool and Dorset Horn Wool respectively; and what was the average price received for each type of wool by his Department on its resale.

Mr. T. Williams: The price per lb. paid in 1949 for Dorset Down wool and Dorset Horn wool was 45d. and 40d. respectively for washed wool and 30½d. and 29½d. respectively for greasy wool. Disposal of the 1949 wool clip will not be completed until the end of July. It is not yet possible, therefore, to state the average price realised on the sale of these types of wool.

Farm, Lewes (Inspection)

Major Beamish: asked the Minister of Agriculture why, and in what circumstances, one of his officers visited Lower Stoneham Farm, near Lewes, and, in the absence of the owner and employer, requested detailed information from the foreman regarding the personal characters of the employees; and whether he will give an assurance that he will not authorise any such further visits.

Mr. T. Williams: A wages inspector of my Department visited Lower Stoneham Farm on 4th May in the course of his duties. In the absence of the employer, he interviewed the manager who, he was given to understand, was authorised to give information about workers' wages. Some misunderstanding about the purposes of the visit appears to have occurred, for I can assure the hon. and gallant Member that the inspector did not make detailed inquiries about the personal character of the employees and that wages inspectors are required to restrict their inquiries to those which are necessary for the enforcement of the Agricultural Wages Act, 1948.

Major Beamish: Is the Minister aware that this bad case was further aggravated by the fact that his officer attempted to

cross-examine some of the employees on this farm and checked the foreman's statement? Will he give an assurance that when he tries his experiments in super-snooping he will not try them in Sussex?

Mr. Williams: The hon. and gallant Gentleman cannot be aware that wages inspectors have had this power since 1924, and that no Conservative Government disposed of them. These inspectors not only conduct inquiries where complaints are made, but, occasionally, they have a test inquiry. This happened to be a test inquiry in accordance with practice.

Ducks (Blood Testing)

Mr. Crouch: asked the Minister of Agriculture if, in view of his recent research into the Salmonella duck disease, he will re-introduce at an early date the blood testing scheme which was discontinued during the war.

Mr. T. Williams: No, Sir. The blood testing of ducks was abandoned because the results obtained therefrom were unreliable. Other methods of diagnosis are being studied but none suitable for general application has yet been found.

Mr. Crouch: Is the Minister aware that organised duck keepers are most anxious to improve the health of the ducks in this country?

Oral Answers to Questions — LAND ACQUISITION, WALES

Mr. Watkins: asked the Minister of Agriculture what representations have been made to him against the proposals of the Forestry Commission in the Upper Towy district to acquire 20,000 acres of land; and what reply he has made.

Mr. T. Williams: I have received representations from the National Farmers' Union, the Congregational Churches of the counties of Cardigan, Carmarthen and Pembroke and the Cemaes Rural District Council about the proposals to acquire land for afforestation in the Towy Valley. This scheme was most carefully investigated before it was announced, and I am quite satisfied that it serves the broad national interest. I have therefore felt unable to depart from the scheme, and have caused appropriate replies to be sent to the bodies that made representations.

Mr. Watkins: In view of the widespread feeling in the localities, and in Wales in general, will the Minister consider the advisability of receiving a deputation, led by the hon. and learned Member for Carmarthen (Mr. Hopkin Morris), the hon. Member for Cardigan (Mr. Bowen) and myself to consider this matter further on a comprehensive basis?

Mr. Williams: I can assure my hon. Friend that this has been considered on a very comprehensive basis, for the purpose of providing pit props, especially for the South Wales coal mines, for bringing spending power into Wales, and as the only possible means of rehabilitating many areas in Wales.

Mr. Hopkin Morris: Is the Minister aware that every farmer holding land in this area has resisted the application for compulsory purchase? In view of the fact that the proposals as they stand are causing concern to everybody in the district will he receive a deputation from the local authorities?

Mr. Williams: I am always ready to receive a deputation if there is any likelihood of it persuading me that my decision is wrong. As the hon. Member knows, this particular area is very thinly populated. The population is decreasing, and unless someone outside Wales takes a decision to help Wales Wales will not help herself.

Mr. Vane: Will the Minister consider placing a map in the Library, showing the boundaries of the scheme and what areas it is intended to plant, so that hon. Members can see how great is the disturbance to agriculture in that area?

Mr. Williams: I will consider that.

Oral Answers to Questions — ELVERS, RIVER SEVERN

Mr. Perkins: asked the Minister of Agriculture whether he is aware of the drop in the catches of elvers in the river Severn during the last two years owing to pollution; and what steps he proposes to take to safeguard this industry.

Mr. T. Williams: There is no evidence that recent low catches of elvers are due to pollution. As elvers take some three years to reach the Severn from the Sargasso Sea many factors may affect the run, and these have produced wide fluctuations in the past.

Mr. Perkins: Is the Minister aware that the shortage of elvers will mean a shortage of jellied eels in five years' time?

Mr. Williams: Yes, but perhaps the hon. Gentleman is not aware that the fluctuation has been considerable. In 1908, 700,000 were caught and in 1911 7½ million.

BUSINESS OF THE HOUSE

Mr. Eden: May I ask the Leader of the House to tell us about Business for next week?

The Lord President of the Council (Mr. Herbert Morrison): Sir, the Business for next week will be as follows:
MONDAY AND TUESDAY, 26TH AND 27TH JUNE.—Supply (17th Allotted Day), Committee.
It is proposed to take Supply formally and then debate the Opposition Motion relating to the Schuman Plan. In view of representations which have been made, the Debate will be continued on Tuesday and brought to a conclusion about 7 p.m. on that day.
Afterwards we shall proceed with the Committee and remaining stages of the Public Registers and Records (Scotland) Bill [Lords], and the Second Reading of the Medical Bill [Lords].
WEDNESDAY, 28TH JUNE.—Second Reading of the Miscellaneous Financial Provisions Bill and Committee stage of the necessary Money Resolution;
Report and Third Reading of the Midwives (Amendment) Bill [Lords];
Consideration of the draft Transferred Undertakings (Compensation to Employees) Regulations, and of the Motion relating to the Government of India (Family Pensions Funds) (Amendment) Order.
THURSDAY, 29TH JUNE.—Second Reading of the Cinematograph Film Production (Special Loans) Bill, and Committee stage of the necessary Money Resolution;
Consideration of the First Annual Report of the National Film Finance Corporation, and of the Motion to approve the Ceylon Broadcasting Agreement.
FRIDAY, 30TH JUNE.—Second Reading of the Colonial and Other Territories (Divorce Jurisdiction) Bill [Lords];
Second Reading of the Agriculture (Miscellaneous Provisions) Bill and Committee stage of the necessary Money Resolution.

Mr. Eden: May I ask the Leader of the House about Friday's Business—the Agriculture (Miscellaneous Provisions) Bill? As far as I know, it has not yet been printed. Can we know when we may have it? May we also know whether it applies to Scotland?

Mr. Morrison: The Agriculture Bill is being presented today and will be available tomorrow. It is a short Bill. I think it has some relation to the Budget. It does apply to Scotland.

Mr. Churchill: I understand that the Government have a statement to make on the MacManaway Report, and I therefore ask them: have they?

Mr. Morrison: Yes, Sir. We have been considering this matter. It is felt that the House ought to deal with the Report of the Select Committee on the case of the hon. Member, and I think that if discussion took place through the usual channels we might perhaps be able to devote half a day to it on Wednesday up to about seven o'clock.

Mr. Churchill: Wednesday next?

Mr. Morrison: This Wednesday coming. The Report has been before the House a little while, and probably it ought to be disposed of because a recommendation was made. I may say that the situation is somewhat changed in that the hon. Member has taken his seat. Nevertheless, we do feel that the state of the law is qualified and it may be for the convenience of the House if I were to say that we shall suggest that it would be wise to get the advisory opinion of the Judicial Committee of the Privy Council so that they can advise us what, in their judgment, is the state of the law. Of course, it is a little different now from what it was when the Committee considered it, in that the hon. Member has taken his seat, but it is for the House to decide.

Mr. Churchill: Surely that does not alter the law. It may expose him to some penalty, but it does not alter the law.

Mr. Morrison: No, Sir. The problem is that nobody is certain what the law is. [Interruption.] With respect to the hon. Member for Croydon, East (Sir H. Williams), who is very confident on the subject, if one proposes to alter the law it is not a bad idea to find out what the state of the law is before one alters it. It is felt that if we could get that advisory opinion it would enable us to consider more carefully whether any further action is needed. It may be that it is not.

Mr. Churchill: Certainly, there is not the same urgency about the matter now that the hon. Member has taken his seat, and an appeal to the Privy Council for an examination of the matter by the Privy Council would no longer prolong indefinitely the disfranchisement of a constituency of 8,000 electors.

Mr. Ellis Smith: With regard to the Debate on the Schuman proposals, my right hon. Friend will be aware that this has aroused great interest and controversy throughout the country. In order that all interests may be able to state their attitude in this House, will my right hon. Friend agree to reconsider the proposal to terminate the Debate at seven o'clock, so that we can have at least two days to debate the proposals?

Mr. Morrison: I am afraid we cannot do that. It is a matter on which I know quite a number of hon. Members wish to speak, but we have by arrangement found this other half day which I thought was a material improvement in the situation from that point of view. I am afraid I cannot go any further.

Mr. Churchill: Returning to the other point, if the decision of the Government and the advice they are going to tender to the House is that the MacManaway case and the state of the law should be referred to the Privy Council, will it not be a little difficult, or at any rate superfluous, for us to argue it all out here beforehand? I am only suggesting that possibly if it were the general opinion that it should be so referred, some other business might come forward and we might make progress with our heavy load.

Mr. Morrison: I am much obliged to the right hon. Gentleman. Certainly I should be much obliged for anything that could help us with the heavy load, because there is a good deal to do before the


day when we hope the House will adjourn. The only point that I am on is that if there is agreement between the official Opposition and the Government, and other people are not dissenting, perhaps we could take it that the Government might be free so to proceed. If, however, there was a difference of opinion it would be best for the House to express itself even if there was a very short debate. I am advised, which I was afraid of, that we should have to get a formal Motion. If we can get that by agreement, I shall be much obliged.

Mr. Churchill: It would be more respectful to the Select Committee if the matter were brought before the House, I was only suggesting that we might not in all the circumstances require a lengthy Debate.

Mr. Morrison: I am much obliged to the right hon. Gentleman. If I may say so, I quite agree.

Sir Ronald Ross: As there is a Select Committee which has recommended that appropriate legislation should be proceeded with, would it not be more proper to proceed with that legislation? The legislation can clarify the law and can amend it.

Mr. Morrison: The point about amending the law is that there is doubt, as indeed the Select Committee reported, on what the law means. That indeed is the whole problem. The Attorney-General gave evidence and was not able to give a decided opinion about it. Others gave evidence and gave more decided opinions one way or the other, and there is genuine doubt about the law. Therefore, it would be well to get this advisory opinion; it can be no more than an advisory opinion, but it would be the opinion of a very high authority. I think we ought to get that in the first instance. If it should prove that legislation is not necessary my impression is that hon. Members generally will be somewhat relieved that it is not necessary on this difficult subject.

Mr. Eric Fletcher: In view of the large number of hon. Members wishing to take part in the Debate on the Schuman Plan, would the right hon. Gentleman consider extending the time for one hour on Monday?

Mr. Morrison: I will consider that, but it must not be thought that because the right hon. Gentleman has helped me to save some time somewhere that I am immediately going to squander it somewhere else. I am in trouble anyway. But I will consider that and it really depends on how the House is feeling.

Sir Herbert Williams: Regarding the question of the missing Member—[HON. MEMBERS: "No, he is not missing"]—he is in hospital—what is the value of asking the opinion of the Privy Council when, whatever that opinion is, it would not be binding on the High Court if a common informer lays a charge? Would it not be very much more appropriate to have declaratory legislation which is the customary practice in a case of doubt?

Mr. Morrison: There are complications which arise which I am not anxious to walk into and hon. Gentlemen elsewhere may not be anxious to walk into when they get there—[Laughter.]—or did not get there—after all we are dealing with an Irish problem. The hon. Member is right that the view of the Judicial Committee of the Privy Council cannot be conclusive, but I am advised that it is an opinion of such weight and importance that it is doubtful, it is very improbable, that it would be different from any view the High Court would settle. It is a convenient way and it would help the Government and the House to consider whether any legislation is necessary or not.

Mr. A. Edward Davies: May I ask my right hon. Friend when an opportunity will be afforded to the House to consider the report of the Commission of Inquiry into the Enugu Coalfield.

Mr. Morrison: I do not know whether there will be a Debate in the ordinary course of the year as there normally is on Colonial Affairs. But if there is it might come up.

Mr. Emrys Roberts: May I ask if the right hon. Gentleman would consider a Motion standing in my name and the names of my hon. Friends relating to the financial and economic relations between Wales and the rest of the United Kingdom, and could he provide time for a Debate, particularly in view of the observations just now by the Minister of Agriculture about the economic conditions of Wales?

[That this House deplores the refusal of His Majesty's Government to set up a committee of inquiry into the economic and financial relations between Wales and the rest of the United Kingdom; considers that Wales is entitled to equality of treatment with Scotland in this respect; and calls on His Majesty's Government to reconsider this question without delay.]

Mr. Morrison: I am afraid I cannot provide time for that Motion.

Miss Irene Ward: May I ask the right hon. Gentleman if he is yet in a position to make a statement on the policy of the Government with regard to fish?

Mr. Morrison: No, Sir, I am not.

Miss Ward: On a point of order, Mr. Speaker. I could not hear the reply.

Mr. Morrison: I agree with the hon. Lady; I had a job to hear it myself. The answer is No, Sir, I am very sorry, but we are not yet ready to make a statement.

Major Guy Lloyd: May I ask the right hon. Gentleman whether he can give any convincing reason to the House why we should have the prospect of being up all night when there is plenty of time to discuss the Finance Bill in Committee? There is no hurry to adjourn whatever and we have far too long a Recess in any case?

Mr. Morrison: I never heard such a long string of false assumptions in all my life.

Mr. George Thomas: May I ask my right hon. Friend when he will give an opportunity for a full discussion of Welsh affairs in view of the provocative statement of the Minister of Agriculture?

Mr. Morrison: I am sorry that I missed this statement. I will find out what my right hon. Friend said but I hope that before the year is out there will be an opportunity to discuss Welsh affairs.

Mr. Pickthorn: About the Nigerian mine, the name of which I hesitate to pronounce, will the right hon. Gentleman consider having put in the Library the minutes of evidence so that it may be easier for hon. Members to judge whether they ought to press for a whole day or not?

Mr. Morrison: I have a memory that a Question was put about this and somebody answered it. Perhaps the hon. Gentleman will find out whether there is a copy in the Library—I am told there is, and therefore the hon. Gentleman will now be happy and can go and read it

Lieut.-Commander Gurney Braith-waite: May I ask the right hon. Gentleman a question on a domestic matter? Is he still hopeful of providing time before we adjourn to discuss the Report of the Kitchen Committee?

Mr. Morrison: I am still hoping, yes.

Viscount Hinchingbrooke: Arising out of the Question of my hon. and gallant Friend the Member for Renfrew, East (Major Lloyd) what is the nature of the heavy load of Parliamentary Business to which the right hon. Gentleman referred? Why was two weeks allocated to the Whitsuntide Recess and why was not six or seven days allotted to the Committee stage of the Finance Bill?

Mr. Speaker: We are discussing the Business for next week and not the whole of the Government programme.

Mr. Pickthorn: I am sorry, I did not say exactly what I meant last time—it happens to everybody now and then. Does the right hon. Gentleman really think that one copy is enough for this purpose and is it not possible to get the thing printed?

Mr. Morrison: I can comfort the hon. Gentleman again; more copies will be available.

Mr. Grimond: May I venture to refer to the Motion standing in the name of the hon. Member for Ross and Cromarty (Mr. J. MacLeod) and myself relating to crofting in Scotland and ask whether there is any chance of time being found for it?

[That this House, believing that a large and prosperous crofting population should be maintained in the Highlands and Islands of, Scotland, calls upon the Government to give immediate effect to the recommendations of committees set up in recent years in so far as they are directed to this object, or to make at once such further inquiries as may be necessary to ensure the best use of crofting land, the extension of small holdings, the


creation of new holdings where possible. the improvement of houses and the encouragement of the existing and of new occupations within the crofting counties, so that the numbers and well-being of the crofters may be increased.]

Mr. Morrison: I am afraid not. I should have thought that when the Scottish Estimates arise again as they will, or on Scottish Estimates in the Grand Committee, that would be an appropriate time to discuss it.

BILL PRESENTED

AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL

"to authorise the payment out of moneys provided by Parliament of grants in respect of petrol-driven machines used in connection with agriculture and of contributions towards costs of providing fertilisers used for agricultural land; and for purposes connected therewith"; presented by Mr. Thomas Williams; supported by Mr. Ede, Mr. McNeil, Mr. Jay, Mr. George Brown and Mr. Thomas Fraser; read the First time; to be read a Second time tomorrow, and to be printed. [Bill 37.]

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 20th June].

[Major MILNER in the Chair]

New Clause.—(RELIEF OF PROFITS TAX ON RESERVED PROFITS.)

(1) Subsection (2) of section thirty of the Finance Act, 1947, as amended by section one of the Profits Tax Act, 1949, shall be amended by the omission of the word "twenty," and the insertion of the word "thirty."

(2) In subsection (3) of section thirty-six of the Finance Act, 1947 (which as amended by section one of the Profits Tax Act, 1949, contains an incidental reference to the rate of tax) for the words "twenty per cent." there shall be substituted the words "thirty per cent."

(3) Subsection (3) of the said section thirty shall be amended by the omission of the words "at the rate of twenty per cent. on the amount of the difference," and the insertion of the words "at a rate equal to the rate of non-distribution relief obtained on those profits." For this purpose the excess of the net relevant distributions over the profits chargeable to profits tax for any chargeable accounting period shall be deemed to have been distributed out of the profits of the next preceding chargeable accounting period on which non-distribution relief was obtained and if those profits are insufficient then out of the profits of the next but one preceding chargeable accounting period in which non-distribution relief was obtained and so on as may be necessary.—[Mr. Eden.]

Brought up, and read the First time.

3.48 p.m.

Mr. Eden: I beg to move, "That the Clause be read a Second time."

This Clause is in fulfilment of the undertaking I gave to the Chancellor on the Second Reading of the Finance Bill that we should seek some further occasion to probe this topic when we got to the Committee stage. The object of this new Clause is to remove the Profits Tax altogether from the profits of companies so long as they are not distributed. As I understand it, the net cost of this concession was estimated last year by the Financial Secretary as £58 million, though conceivably I should have thought that it might be rather less after certain other gains were taken into account.

There are some matters about this new Clause on which we are all agreed, and one might perhaps mention them first. Nobody will dispute the need for industrial concerns to conserve their profits by


putting sums to reserve, and yet, when these sums are so put to reserve they still remain chargeable to Profits Tax at the rate of 10 per cent. in place of the higher rate of 30 per cent. on distributed profits. I do not think, either, that the Chancellor would dispute that the problem of replacing the physical assets of industry at current prices is a very serious one.

The arguments are so well known that I do not propose to rehearse them in detail. It is only necessary to say that the replacement cost of plant, machinery and other physical assets has risen as a result of the war and of post-war inflation—would it be right to say?—between twice and three times the pre-war cost, and in some instances it is higher still. It is certainly higher still, for instance, for imported machinery, since devaluation.

Existing wear and tear allowances—and here also, I think, we are agreed—allow only for the building up of replacement funds equal to the original cost; and, therefore, businesses have to provide the differences between the original costs and the replacement costs out of their taxed profits. In addition, industry has to provide out of its liquid resources for carrying its stock, work in progress and debtors all at greatly increased prices.

Therefore our submission is that the profits on which industries are taxed are not true profits, since a large part of the earnings on which they pay tax is required merely to maintain existing productive capacity. About that, again, I known there cannot be any dispute because the Chancellor himself put the case so well at Workington in January last year, when he said this:
A large part of so called profits is not a pure surplus, but must be put to reserve for replacement and repair of plant and machinery and for industrial expansion to meet our new production needs.
Therefore, there is no dispute about that.

Thus it is that concerns, industries and companies, which, on paper today are reasonably prosperous, are selling their Government securities, borrowing from the banks, or raising fresh share capital in an effort to maintain the old level of production at higher prices; and if no adequate relief from taxation is given, I should suspect that there is some danger of a shortage of capital—new capital—in the not distant future.

Now it may be said—and will be said by the right hon. and learned Gentleman when he replies—that the sums placed to reserve by industry have greatly risen. That, of course, is perfectly true; but, as I have said, the costs of replacement have risen twice or three times compared with those before the war. In fact, a large part of the £530 million which was put to' reserve last year was required to make up for what is the admitted inadequacy of the depreciation allowances.

I understand that Mr. Chambers, who is now the I.C.I. finance director, and, I think, was—if I am right—an Inland Revenue official at one time, in an article he wrote in "Lloyds Bank Review" in January last year, estimated the deficiency of existing depreciation allowances, as compared with the money which was required to be spent in 1947, as £400 million. The President of F.B.I. put the figure for 1948 at £300 million, and there is an interesting figure in the National Income White Paper for 1948 which shows that the extra cost of maintaining the volume of stocks at increased prices was no less than £400 million. I am not suggesting, I hasten to add, that that relates only to stocks carried by industry I fully realise it does not. I imagine it is for all stocks in the country altogether, including Government stocks. However, it still does show the recent tendency of that cost, as well as that of the other items I have mentioned.

I do not suppose, in face of those figures, that anyone can deny—or would wish to deny, probably—that this problem is a real one. Leading accountants have recently emphasised its gravity. Mr. A. Stuart Allen, President of the Society of Incorporated Accountants, said at the Society's annual meeting on 25th May last:
A fiscal expedient introduced shortly before the war and estimated to produce an annual revenue of £20 million at a flat rate of 5 per cent.,"—
that is, the old National Defence Contribution as we knew it—
has developed into a levy which in 1949–50 depleted corporate resources by £260 million, and that at a time when modernisation and expansion of productive capacity were keynotes of official policy.

The Chancellor, I understand, has accepted this argument in principle—the argument that action is necessary—both


by his action in doubling the initial allowances last year and by setting up the Tucker Committee to investigate the whole question of the proper basis for computing business profits. It is rather disappointing to hear that the Tucker Committee is unlikely to publish its Report before the end of this year; though I would agree with the Chancellor that, if that time is necessary for the work to be well done, it will be time well spent. Still, this fact only makes it all the more important that the Chancellor should take any action that may be open to him now, both on the grounds of logic and of sound economics, to abolish the tax on profits put to reserve. I do not think anyone, after what I have said, and in face of the figures I have given, will dispute the handicap that this tax is to productive efficiency.

I just want to give one comparative figure. It is from the United States of America. I think I am right in saying that undistributed profits of large companies in the United States today carry taxation of about 7s. 6d. in the £. I think that that is about the figure. It compares with almost 12s. here. Moreover, I think that smaller concerns in the United States pay even less than the 7s. 6d. It is quite easy to criticise British industry for being less progressive or productive than American industry, but having regard to the burdens it has to carry in the form of taxation, both on capital and on income, I think it is a tribute to British industry that it is so vigorous and so vital.

At the present time, when so much depends upon enterprise—and I noticed what Mr. Tanner said over the weekend, again urging more production, and rightly—it is almost incredible that income from enterprise should be more heavily taxed than any other form of income. And yet so it is today. The object of fiscal policy surely ought to be to encourage the building up of reserves for the re-equipment and for the modernisation of our industry, and not to hinder it.

Last Saturday, reading the "Economist," I came across an account of the recovery of Sweden, which is interesting, to which I would draw the Chancellor's attention in the hope that it may melt his heart a little, because I know he approves of Sweden and Swedish methods in politics and in industry. What happened there? It is an interesting commentary.

The attitude of the trade unions"—says this article—
towards production affords an example of enlightened alertness which could well be imitated in other countries. It was the unions, for example, that insisted on the provision of fiscal incentives to plough back profits into industry.
I think that is rather interesting, because the Chancellor on Second Reading, in reply to me, pointed out what is going to be the effect of this kind of thing on the wage position in this country; and yet in Sweden it is the unions themselves who have urged this and insisted upon it, and won their way and secured it, their argument being, of course, that industry would thereby be more efficient, and that they themselves would obtain a larger share out of the greater efficiency and the larger profits which industry would earn. I suggest that perhaps in this Swedish example there is a lesson for us, too. At any rate, I should like to see the Chancellor following that precedent.

The only other comment I have to make is about the new Clause itself.

Mr. Ellis Smith: Before the right hon. Gentleman leaves that point. He is making his case very reasonably, but seeing that what he has suggested with regard to modernisation was not applied before the war, then, supposing this Clause is accepted, what guarantee have we that the money will be spent on modernisation now?

Mr. Eden: I think that that is a perfectly fair point. I was just coming to it in respect of the drafting of the Clause. We have to word the Clause so as to deal with the contingency—which, I submit, is unlikely, but which, were it to arise, would be counter to our intentions—the contingency that these profits would not be spent in the way in which we should like to see them spent, but might be distributed at a later date. I think that that is the point that the hon. Gentleman, very properly, has in mind. We have tried to meet that very point in the drafting of the Clause, and that is why it is rather complicated. I think that we have met it. If we have not we should be very ready to consider any form of words designed to do so, because the object of the Clause is to enable industry to use this money for re-equipment, and for nothing else—certainly not for distribution in the form of larger dividends, or anything of that kind.
4.0 p.m.
If they did at a later date distribute this money in the form of dividends or anything else, then the tax would have to fall at the same rate as if they had not had the exemption; the tax would have to be a retrospective levy. That is what we have tried to make clear in the terms of our new Clause. That is the case we submit to the Committee. I do not think it is a case that concerns party politics. It is a case which I hope will appeal to all hon. Members who are concerned for the future of British industry, and I hope the Government will see their way to meet us in some measure upon it.

Mr. Albu: The right hon. Gentleman has put the case on grounds which I think we can all accept—those of the national interest and the national economy. Nevertheless, I think the Committee should be aware of the fact that there are three aspects of this proposal. The first is how it will affect the Revenue. The right hon. Gentleman has himself admitted that it will affect the Revenue to the extent of about £60 million. That sum would presumably have to be found, and no doubt we shall hear from the Treasury Bench whether that sum is correct. I do not think it is any good hon. Gentlemen opposite now demanding that we should discuss a reduction in expenditure, because only yesterday the right hon. Gentleman himself agreed with the Government on an item of increased expenditure which may be necessary in the near future in regard to Malaya. I think I should be out of order if I proceeded any further on those lines.
There are two other aspects of this matter. One is what I would call the technical and economic aspect, on which the right hon. Gentleman based his case, and the other is an aspect which cannot be neglected when discussing taxation, and that is social equity. On the technical and economical aspect, I think the right hon. Gentleman would agree that there is a great deal of conflict in industrial circles; certainly it is not quite so simple as he would lead the Committee to believe. Anybody who has been following the discussions that have been taking place amongst accountants and economists during the last year or two,

and anybody who has read books like Mr. Sewell Bray's "The Measurement of Profit," will have realised that this is not a matter on which there is a universal opinion amongst industrialists, economists or accountants. It is a very complicated question indeed as to what value we should place upon stocks and what value we should place upon plant, machinery and other assets in the balance-sheets of companies continuing in business.
We all await with great interest the Report of the Tucker Committee, and I suggest that it would be inadvisable to take any further steps until the Tucker Committee has reported. In the meantime, I cannot agree with the right hon. Gentleman that the matter is of such urgency for one or two reasons. The "Economist" itself, which is always anxious to try to prove that the Government are robbing industry of its assets, has had to admit, when discussing the reports of the companies that reported in the first quarter of this year, that they did not show any signs of financial strain, and the capital and free reserves indicated in the 559 companies which reported show a quite considerable increase.
Then, of course, there is the question of the difference between the inflation that took place during the war and the continuing conditions in present circumstances. The Chancellor has already given considerable assistance to industry by the increase to 40 per cent. of the initial allowances made in the Budget last year. I suggest however, that on current business, even if some prices are rising, replacement of stocks and fixed assets takes place out of increasing profits at increasing prices. When there are falling profits and falling prices presumably the cost of equipment, plant and stocks are falling too.
In other words, if the profits are rising because prices are rising, profits are higher to pay for the increased costs of replacement. If profits are falling it is because prices are falling and the price of equipment—and certainly of raw materials, which probably fall first—will be falling too. I therefore suggest that this matter is far too complicated to be dealt with in the rather simple manner, if I may say so, in which the right hon. Gentleman put it to the Committee.

Mr. Oliver Lyttelton: Surely the hon. Gentleman is not suggesting that the prices of re-equipment have now begun to fall? My information is entirely contrary.

Mr. Albu: No, I am not suggesting that, because I think prices are rising. There are signs that that is the case, and that during the early part of this year profits were again rising, too. If the boom in the United States continues, profits in this country will continue to rise pari passu with the rise in the prices of raw materials, and presumably with a rise in the price of the replacement of assets, although I should have thought, particularly with the increase in productivity in the engineering industry of this country, that the cost of the replacement of fixed assets should show a considerable decline, because the cost of labour in those assets is a very much higher proportion of the total cost compared with the cost of materials than in many other products.
Finally, I turn to the question of social equity. In moving this new Clause, the right hon. Gentleman said that he and his hon. Friends had drafted it in such a way as to avoid the distribution of these retained profits to the shareholders. I think the right hon. Gentleman will admit that the retention of the profits will mean eventually increased profits for shareholders out of the increased assets; or, alternatively, if there were to be an end of dividend limitation, very great capital gains indeed, because presumably the Stock Exchange values of companies which retain profits in this way are held down at this time only because of dividend limitation. If it were removed, as has been seen in the case of Woolworth's recently, there would be a considerable increase in share values, and therefore considerable capital gains to shareholders.
The problem for hon. Members on this side of the Committee is that we are not only dealing with the national economy. Companies belong to private shareholders, and the increase of profits or the increase of the assets of companies out of profits affects, either immediately or in the near future, the power to spend, the power to demand things out of the national economy. This is one of the conflicts between the two sides of the Committee, and one of the real problems with which

we are faced. The right hon. Gentleman referred to the trade unions, and I think that at the present time the trade union movement would find it extremely difficult to maintain even the present degree of wage restraint if they were not to believe that, in some way or other, all these increased profits going into increased assets would not go eventually to the ordinary shareholders of public companies, who play no part whatever in their management or control.
Having said that, I believe that there may be a case for looking at the small concerns which are really the risk takers and are really enterprising, where the manager and owner are roughly the same person or persons, and whom it is desirable to encourage in increasing their activities and their enterprise. Hon. Members on this side of the Committee would not, I think, necessarily object to that, but I do remind the Committee that two-thirds of the business of this country is done by public joint stock companies whose shareholders are absentee owners who play no part in the business whatsoever.
I suggest that if we are ever to get this matter finally agreed with the trade unions and the workers who work in industry, we shall have to look again at the laws of joint stock companies—or, rather, at the principles of joint stock companies, because there is nothing in the law which says that the actual assets of joint stock companies are entitled to be maintained, but only that the nominal money capital should be maintained. We should have to look at the practice that has grown up of the whole surplus of a public joint stock company belonging to the ordinary shareholders.

Mr. Henry Strauss: I am anxious to follow the hon. Gentleman's argument. Is he saying that it is contrary to the public interest that there should be an increase in the assets held by joint stock companies?

Mr. Albu: The hon. and learned Gentleman has not followed the three parts of my argument. I particularly said, in the second part, that the right hon. Gentleman the Deputy-Leader of the Opposition put his case on the grounds of national interest, and I also said that on those grounds we on this side of the Committee could agree. I pointed out,


however, that there was no agreement among accountants, economists and industrialists on the technical aspects of this matter.
I am finally saying that there are grounds of social equity which make it extremely difficult to solve the matter without changes in the present company law, if one is to take into account modern conceptions of social equity. I was suggesting that in the case, at any rate, of public joint stock companies with absentee shareholders, the time may well have come when we ought to consider whether or not there must be some permanent dividend limitation, and whether we ought to continue with the principle that the whole of the surplus incomes of these companies belongs to the ordinary shareholders.

Colonel Ropner: I do not intend to follow the hon. Member for Edmonton (Mr. Albu), and I certainly do not want to over-simplify or to try to over-simplify my remarks on this new Clause. I do, however, wish to draw the attention of the Committee to one aspect of this form of taxation which affects those industries which are open to competition with other countries. The Committee will perhaps excuse me if my remarks are in particular devoted to the shipping industry, but that is an industry about which I know something, and I think that it is typical of those industries which are open to the full extent of foreign competition.
Let me freely admit that the shipping industry is enjoying comparatively prosperous times today; but so are our foreign competitors; and what is happening now is that, whereas British owners are finding it extremely difficult to set aside those reserves which they are quite sure will be sorely needed at no distant date, our foreign competitors are day by day gaining a substantial lead in their financial position over Britishers and are putting aside very much higher reserves than the British owners are able to do.
The hon. Member for Edmonton talked about social considerations in this matter. He should, I think, take into account the possibility of grave unemployment in some of these industries at some future date. I am quite sure that when difficult

days arrive, as they may well not many years ahead, in the shipping industry and other industries open to full international competition, it will be the industries of those countries which have been able to maintain in a high state of efficiency their equipment—in the case I am thinking of in particular, their ships—which will suffer least from the bad times when they come.
4.15 p.m.
I know that it is a fact that at the present moment foreign shipowners—and I am sure that this is true of other international industries—are acquiring highly-efficient modern tonnage, whereas British owners are prohibited from doing so by the high rate of direct taxation, of which, I think, the tax under discussion this afternoon is the most iniquitous of all. If, as I am sure is the case, the Government desire to take the long view as well as the short view, I want to impress on the Minister who is to reply that there must be some alleviation of direct taxation if British industries, such as shipping, are to survive when bad days return, which they may well do at no very distant date.

Mr. Angus Maude: I want to take up one or two small points which the hon. Member for Edmonton (Mr. Albu) made. First of all, it seems to me that his suggestion that industrial companies in this country were finding no difficulty in replacing out of their resources the plant and equipment which have become obsolete requires a great deal of proof. I think that he quoted the "Economist" as stating that the quarterly reserves of profit showed no sign of strain. I cannot remember the exact issue, but my recollection is that not very long ago the "Economist" published another article in which they said that the replacement of inventory stock and plant was causing great trouble in particular cases where costs were rising sharply.
The hon. Member suggested in a complicated argument, which I should like to read before commenting on it at length, that there was no real difficulty about this, because when profits were falling, prices for replacement would be falling, too, and when prices were rising, profits would be rising pari passu, and the difficulty would not be so great. That, I think, was the burden of his argument. That seems to me to be an attitude of mind which is partly responsible


for the present trend of rising prices. If we do not mind very much that prices are going up, then, of course, we can say, "It is all right; let profits go up as well," and they will. Personally, I do not believe that profits in most cases ought to go up any more than they are going up now, and that they cannot go up any more if rising prices are the corollary to them.
I am certain that the Government's present financial policy has the immediate result of sending prices up, because there is no inducement at all for greater efficiency when it is just as easy to make high profits without being efficient as it is to make profits through being efficient. Unless we are prepared, it seems to me, to do something directly aimed at getting replacement capital costs down—although it may help the Chancellor to find that profits and therefore his tax Revenue are going up—it will be the ruin of the industries of this country, and also place the capital industries of this country at an increased disadvantage with their foreign competitors.
One final point on the argument about social equity. We have heard something of this kind when considering a number of Clauses in this Bill, and it has to be a great deal more specific before it will carry any weight with me. Are we really to believe that the hon. Member for Edmonton is perfectly content to hamstring British industry by preventing them getting a tax concession, which he himself has agreed is desirable in the national interest, simply because someone may find the price of his shares going up? If that is the Socialist conception of social equity, and if they are prepared to throw British industry to the wolves for the sake of keeping down the interests of a class of whom they disapprove, I can only say for my part that social equity is a very different thing from what I have always understood it to be, and that is justice and progressive justice.

Mr. Albu: Does that mean that the hon. Gentleman is unwilling to see any interference in the right of shareholders in public companies to take the whole of the surplus income?

Mr. Mande: That was not what emerged from the hon. Member's original argument. He was saying that we must not give this concession until

we have had a couple of committees and got a lot of accountants, lawyers and economists together to see how we should reform the company law. Company law is a very complicated matter on which I am no expert, and I should be out of order in discussing it, but I know that this is a matter of urgency. We cannot afford to wait for reports of committees. I do not believe that the effect on the equity value of shares is going to be nearly as pronounced or will operate nearly as much in the interests of a minority rentier class as the hon. Member believes.
If we do not give this concession, then sooner or later we shall find our competitive position deteriorating, and that will affect the Revenue of the Chancellor in a way he will find very difficult to sustain. I also believe that this is a matter which will confront us, the shipping industry perhaps being the most obvious example, in a very short time indeed. All the capital goods industries may face difficulties soon, and the shipping industry very soon. I hope we may have some concession to show that the Government are, at least, aware of the urgency of the matter and are prepared to meet us in some measure.

Mr. Spearman: I thought that the hon. Member for Edmonton (Mr. Albu) made as restrictive a speech as I have heard in the few years I have been a Member of the House. He seemed almost to be saying that whereas we want to do such things as will make the poor rich, he wants to keep the poor poor in order that there shall be no rich.
The Financial Secretary told us last week that he thought the tax then under consideration, however necessary it might be, was unattractive compared with the Profits Tax. It seems to me to be a fair assumption to make that he approves therefore of the Profits Tax. I hope it will fall to him to reply to this Debate, so that he can tell us why he approves of the Profits Tax. Can it be that he is so occupied in giving good advice to Whitehall that he has not yet realised the difference between profits which are good for the country as a whole and profit margins that are bad?
I entirely agree that we want to keep down the profit margins all we can, but


perhaps one of our main attacks on the Government's handling of our economic affairs is that their policy prevents that competition which is the only way that profit margins can be kept down to the minimum. Perhaps I might quote the example of Ford Motors in advance of the argument that profits are good for a company. This company at one time made the greatest profits of any industrial company in the world. At that time they were paying the highest wages of any company in the world, and there is no harm in that. They were also supplying goods at the lowest prices in the world. Profits, on the whole, must be good for the country when they result in efficiency.
I am not suggesting that Members opposite have a complete apprehension of modern ideas of finance, but in modern ideas of finance it is generally accepted, I think, that no longer is it the object of taxation to collect so much money for the coffers of the Treasury, but to make a balance between the demand and supply for goods. What possible demand for goods can be created by the profits which are not distributed? As they are not given to the consumer, the consumer cannot possibly spend them. The only people who can spend them are the companies in replacing their equipment.
It may be that, owing to the vast proportion of Government expenditure, it is necessary to cut down the expenditure on capital equipment. But, can it possibly be the wisest way of doing it to make an indiscriminate cut on all concerns, good or bad, efficient or inefficient, whatever their purpose? It might not be a perfect weapon, but a far better weapon for that purpose is the interest rate; to put up the interest rate so that it is not worth while inefficient concerns spending money on capital equipment, but only worth while to those who can make good profits.
It might well be that if this Profits Tax were cut out the Chancellor would lose £60 million, as the hon. Member for Edmonton has said, but if the Budget surplus was less than that amount, what does it matter provided the money is not spent? Surely it would be only an embarrassment to the Chancellor to have a huge Budget surplus and continually to be pressed to make concessions. It

would be far better if the same restriction on purchasing power could be maintained without a large Budget surplus.
It is vital at the present time to see that those industries which can best produce goods for export and home consumption are re-equipped. When Members opposite talk about extortionate profits, I wonder whether they have looked at the figures given in last week's "Economist." Mr. Stuart Allen, who is, I believe, President of the Society of Incorporated Accountants, quoted the case of a company which had a capital of £100,000 in 1900. He made two assumptions. The first was that prices have gone up three and a half times since 1900, and the second that during 1948 prices rose generally by 5 per cent. On these assumptions, he showed that in order to pay the present rates of Income Tax and Profits Tax, as well as to maintain their capital intact, the company would have to make a profit of 43 per cent. to pay a 6 per cent. dividend. Hon. Members opposite may say that 43 per cent. is an extortionate amount, but it is necessary to make that large amount in order to pay the not immodest dividend of 6 per cent.

Mr. Jenkins: Will the hon. Member say whether that is 43 per cent. of its nominal or 1900 capital?

Mr. Spearman: It is 43 per cent. on the money put up by the shareholders in 1900. This means a much smaller yield than 6 per cent. for those who have bought the shares at a higher price. I am quoting the original price, which is much more favourable to the argument of Members opposite. I oppose this Profits Tax, not because it hits a certain section of the country, because I could not expect support from Members opposite in doing that, but because, and I ask all thinking Members opposite to oppose it on these grounds, it impoverishes the whole economy of the country.

4.30 p.m.

Mr. Mitchison: There are two main points about this Profits Tax. Firstly, we are told that it throws industry to the wolves. That phrase, I think, was used by the hon. Member for Ealing, South (Mr. Maude), who said that it was causing great difficulty and the like.


That is obviously a complete exaggeration. So far as making profits goes, companies in this country at present are doing quite well, and with a tendency to rising prices there is at least a corresponding tendency to rising profits. It was very properly observed that the difficulty in replacing stocks and plant on a rising profit and rising price position disappears, and is met by a corresponding facility when and if prices and profits come to fall.
What we are asked to do is to meet the former difficulty, which no doubt exists, by a particular fiscal measure. One has to remember what happens when the reverse process takes places and there is a tendency to falling prices and profits. In those circumstances the person who is bound to replace is making an actual profit, a capital profit if I may so put it, out of the replacement money he has put aside in the rising price period. The difficulty only exists so long as there is a rise and so long as the rise continues. It is an exceedingly difficult point to put clearly or, indeed, to measure clearly, but it is not a question merely of prices and profits, but of the rise continuing or not continuing.
The second point I want to put in this way. Something was said about social equity. I should like to put the matter very simply. At present in this country we are facing a large number of claims for increases in wages. It would be out of order to go into them now. But there are some cases of wage and salary earners to whom a rise is long overdue. I have in mind cases like school teachers, railway-men and others. I do not want to go into that now, but clearly if all those claims are to be met, then we are on the high road to inflation. That position is recognised by responsible trade unions and by the men themselves. They have always made it a condition—and it is a reasonable one—that so far as shareholders hold back from taking their share of the profits that have been made—I think that is the way they look at it—then they will accept some corresponding holding back.
In this case they would say, "Profits have been taxed, but now some of them are going to be relieved from taxation." They would not inquire too closely into the question of whether those profits were distributed or undistributed. They

would simply say, and rightly, that the effect of this new Clause would be to reduce taxation on profits. I do not see how that could be denied or how any man at present faced with that position could not feel that the lid was completely off, that the pot was boiling, and that the time had come to press forward wage claims, whether or not they were such as would receive our particular sympathy.

Mr. Spearman: If these profits were not going to be used to increase dividends but rather to improve the capital equipment of the country in order to raise the standard of living of the workers, would they still take that view?

Mr. Mitchison: I think they would, with respect to the hon. Member. I do not believe that those earning wages and salaries look as closely as he does at the way in which profits are applied. I am going to deal with the substance of his objection later, but I want to say that these people would rightly say that here is an easing of taxation on profits, and they would feel that that would justify a wage claim, which otherwise might have been withheld, at any rate for the time being, in the national interest. That, at any rate, is my own view of what would happen.
If I may take the hon. Member's courteous interruption and go on to the next point I was going to make, I should say that one has to remember what happens to undistributed profits. It is perfectly true that they are not put into monetary circulation, but they remain in the coffers, if I may over-simplify the matter, of the companies concerned. They remain available for the replacement of stock or machinery, or, of course, for the substitution of other machinery or the substitution of other stock, or generally for the enlargement of a company's activities. To that extent they represent a potential demand on the capital resources of the community.
On the other hand, they may be taken by way of taxation to some extent, and it seems to be assumed by hon. Members opposite that they are thereby at once dissipated in some remarkably profligate way. That is quite untrue. Much of the expenditure that the Government have to consider is not only obviously necessary, but, on any possible view of the matter, a great deal of it is in the nature of


capital investment. There are people who would like to see more sewage schemes in the countryside, and the objection which must be offered by the Chancellor of the Exchequer or the Ministry concerned is that in the circumstances of the country at the moment it would be excessive capital expenditure. There are others who would like to see an extension of the telephone service.
Those are matters of Government capital expenditure, and it seems to me that one has to remember that in the long run it is not a choice between one item in a company balance sheet and one item in the public accounts, but a question of whether the choice of the capital investment programme should rest with—I do not wish to use the words offensively in any way—the big business community or whether it should rest with the Government. In the present state of the capital investment programme of this country, when there are so many urgent public demands for investment capital, the transfer of the choice and power from the hands of the Government to the hands of the business community would not be in the public interest. That would really be the practical effect of this tax remission.
Accordingly, for three reasons, I object to this concession. My first reason is that, though it has a spurious appearance of fairness, it does not really take into account the temporary element in the replacement of capital goods by companies. Secondly, and perhaps in some ways most urgently, it does not take into account the psychological effect that any reduction in the Profits Tax would have in this country. It would have a most grievous inflationary effect in practice. Thirdly, when we look at the reality of the matter, this is not a choice between a prudent company putting aside money for the replacement of capital assets and profligate spending by a wicked Government. It is a choice between who, to this extent, is to have control over actual and potential investment: the Government of the day, with such urgent capital requirements as those I have already mentioned and many others, or the business community.

Sir Arnold Gridley: I wonder whether it would be possible for every hon. Member to put out of his or

her mind, at any rate for a few moments, all thought of profits, shareholders' interests, rising shares values, and the like, because the Clause about which we are talking now affects what is really the core of our national problem; that is: How can we increase our production and our sales overseas and, to do that, how can we cheapen our costs?
Every day this week I have been asked to sanction the expenditure of some thousands of pounds on new tool equipment. In a few remarks I made in a speech in this Committee a few days ago, I said, rather complainingly I fear, that those of us who are engaged in engineering production had to contend with increased costs in all sort of directions—power, gas, electricity, railway freights, and so on. All these additions to our costs are forcing the managers of those engineering concerns with which I am associated to apply their minds the whole time to this question: How, by putting in equipment even more modern than we have, can we reduce our costs of cutting material into the shapes required, of setting up machines and so on, in order to meet increased costs in the directions which I have already indicated?
I am sure that my hon. Friend the Member for Edgbaston (Sir P. Bennett) would confirm that those of us who are trying to conduct our businesses are not so much concerned about the making of profit as about cheapening our costs of production in order to increase our sales. If we look at the Americans, when we are trying to get into the United States, we find that it is a well-known fact that in their industry there is three times the horse-power in mechanical equipment placed at the disposal of each individual workman than there is in this country. We are up against another very grave difficulty which is not being fully appreciated, and that is the handicap from which we suffer in the shortage of electrical power generally in this country. In connection with that point, I suggest that every Member of the Committee should read, mark, learn and inwardly digest the very grave warning issued by Sir Henry Self, one of the two deputy chairmen of the British Electricity Authority, when he spoke at Harrogate two days ago.
4.45 p.m.
We are suffering from that handicap, and we could do a very great deal in the


way of providing ourselves with more modern equipment if we could be sure that the electricity supply would not be cut off during the winter. Sir Henry Self pointed out that the whole of the capital investment programme of the Government may be thrown into complete jeopardy after a number of interruptions in the supply reducing for several hours in the winter months the rate of production, which is running in this country at the present moment at some £6,000 million per annum. These are grave matters when we are considering our economic situation. This is a definite handicap to industry.
If those of us who are responsible for what we do with our profits decide, as most of us have decided, to limit our dividends, at the request of the Chancellor of the Exchequer, and to leave as much as we can in reserve—and we have fulfilled the Chancellor's request as honourably as we can—a great deal of what is left is taken away in taxation by the Chancellor with the other hand. We have not the wherewithal to provide the additional new equipment that we require in order to reduce our costs and make it possible for us to do what everybody, trade unions, leaders of industry, and those in Government circles who understand industry, regard as absolutely vital and essential—to improve our production. Great as is our production at the present moment, it is necessary to do all that is humanly possible to increase it still further.
Have we reached a peak of production in this country? Are we now faced with a decline? I know this, that in the shipbuilding industry very great anxiety is being felt, and that unemployment is commencing there. Those who may have the time to read the speeches of chairmen of companies who have held their annual meetings lately will have seen the warnings issued that the size of the order book is falling off and that orders are very much more difficult to get and competition is increasing. Do hon. Members realise what the effect on the costs of production in the electrical industries are? Only a few days ago the price of copper went up £16 per ton, and it may go up still further. It is one of the essential raw materials in that industry.
I do think that it is most vital that we should not be worrying our heads in this Committee about profits, or whether the

prices of shares go up or down in the market. Let those matters take care of themselves. We need to concentrate upon cheapening our production and increasing our sales in this country and overseas. One great handicap to our being successful in doing that is a tax of this kind, which makes it more and more difficult for us to provide the equipment necessary to enable us to achieve success.

Mr. Leslie Hale: Every discussion I have listened to for six years past on this matter has consisted of a weeping, wailing, and gnashing of teeth by dismal Jeremiahs opposite who are always predicting the doom of their country. We have had it every time and we are having it now. I want to make an appeal today for something quite different.
In my constituency of Oldham there are the greatest textile machinery mills in the world producing some of the best machinery in the world and selling it everywhere—everywhere but in Oldham. The market for home machinery is still stagnant and disappointing. The amount of re-equipment being done in cotton spinning is regrettably small. [HON. MEMBERS: "Hear, hear."] I shall deal with that point and I hope that the Opposition will applaud when I have finished it. I will give the reason. We have given subsidies but they have had practically no effect, although we were told by the Opposition that that was the sort of thing which should be done. We made a substantial concession with regard to depreciation allowances in the hope that it would have some effect. The shareholders of public companies have had more concessions in the last six years than have any other taxpayers. We abolished the Excess Profits Tax at the earliest possible moment, and although the Chancellor said that something would have to be put in its place, the only thing that was put there was this small Profits Tax.
What is holding up re-equipment in the cotton industry? It is not the Profits Tax. It is the fear that somehow or other 1923 will come again. Why does that fear exist? It is because hon. Members opposite continually attack the prosperity of the country, continually depreciate the efforts of the workers and continually prophesy imminent doom. Time after time we have heard from the hon.


Member for Chippenham (Mr. Eccles) the prophecy that this is a temporary boom and that it will cease. We were attacked in February and told that we were having a premature General Election because by April or May the country would be facing disaster. We were told that the Labour Government would have to introduce a new Budget.
What is the position at the moment? Quite recently the Chancellor of the Exchequer was able to announce production figures far in excess of what they were before and that our dollar sales had increased beyond the most optimistic expectations as the result of a device which was adopted last year and which the Opposition attacked so much and said would result in the doom of our industries. If they will go up to Lancashire this holiday and say that we are the most fully-employed country in the world and that we are producing some of the best materials in the world, that our goods are now occupying wider markets, that our shipping is carrying a greater proportion of the trade of the world than before and that they see no reason why this state of affairs should not continue, they will be rendering the country a real service and may help in the cause of re-equipment.
Whenever we have suggested planned economy and whenever we have suggested planned re-equipment by the use of budgetary devices to encourage re-equipment and to stop inflation, we have listened to attack and criticism from the Opposition. The words "planned economy" have been used as a term of abuse and contempt. I hope we shall hear the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) on planned economy on Monday or Tuesday when he is supporting the turning over of the British steel industry to international control, after so bitterly opposing its control by the Parliament of his country. If hon. Members opposite would really think in terms of national interest in this matter and would go to the country and help to spread the really good news which the Chancellor has been able to give us in recent months about our position, they would be rendering a real service in creating permanent confidence and providing an opportunity for re-equipment to take place.

Mr. Brendan Bracken: What about the influence of devaluation?

Mr. Hale: The right hon. Member for Bournemouth, East and Christchurch (Mr. Bracken) is really a little out of date. I should have thought that he would read the "Financial Times" more regularly than he appears to do. The influence of the results of devaluation was given some weeks ago, while devaluation took place some months ago. All the indications are that our dollar sales have expanded very much and that very great and substantial benefits have been brought about.

Mr. Bracken: Our devaluation, which, apparently, according to the hon. Gentleman, produced these wonderful results, has added roughly 25 per cent. to the price which we pay for our commodities, and the workers of Oldham must work at least one-third harder in order to get their exports to the United States now.

Mr. Hale: Our devaluation has increased by a very substantial percentage the amount of exports to the dollar market, and it was precisely as a result of that device that the Chancellor was able to tell us that in the first quarter of this year we had really achieved, if only temporarily, a complete dollar balance.

Mr. Spearman: Is the hon. Gentleman aware that our dollar sales for the first quarter of this year were about 100 million dollars lower than they were in the first quarter of 1949? Is that "exceeding our greatest expectations"?

Mr. Hale: Devaluation was forced upon us. If hon. Members opposite were so opposed to devaluation, some of them might have restrained themselves from making the speeches in America which had a great deal to do with producing the situation in which devaluation became necessary.

Squadron-Leader Burden: Squadron-Leader Burden (Gillingham) rose—

Mr. Hale: I have given way before and I do not think that I should take any more interruptions. I read assiduously newspapers like the "Daily Express," a very well-produced paper. I do not completely share some of its views, but we are being told in it that Britain is on a wave of prosperity. On the financial page we are told that now is the time to


invest money in the shares of public companies and that in the months to come prices and profits will rise and there will be capital gains; but on the political page we are told that we ought to push out the Socialists who have caused this prosperity and try to get a new system. I read that every day. If the Opposition teach prosperity on the political platform as well as in the "Financial Times" and the industrial columns of other newspapers, they will be doing a real service to the country and we shall get re-equipment.

Mr. David Eccles: I am glad to follow the hon. Member for Oldham, West (Mr. Leslie Hale), but I believe that I should be out of order if I gave a long disquisition on the economic situation. I wonder whether he realises how small a recession in the United States last year caused us to devalue. Let him consider how extraordinary is the size of the boom in the United States now, which if it were to go on for ever and ever would please no one more than it would me. Does he really think that it is in the interests of the people of Lancashire to make to them a political speech on the assumption that the present level of boom in the United States, over which he and I have really no control, will go on for ever and ever, or does he think it might be wiser to look ahead and prepare for something compared with which the small recission last year will probably be considered almost boom-time?
What we say is that devaluation—called "a device" by the hon. Gentleman—is not a device for raising the standard of life in this country. It is possible—I think it is true—that if we take appropriate measures it will enable us to close our overseas gap, but it will be at the expense of lowering the standard of life at home. It must be that way.

Mr. Bracken: Particularly in Oldham.

Mr. Eccles: What my right hon. Friend says must be true of any manufacturing industry using raw cotton.
To return to the Clause, I want to try, before answering some of the arguments used by the hon. and learned Member for Kettering (Mr. Mitchison)—whose speech was the most interesting that we have heard from the other side of the Committee—to get agreement on one point. I believe that the Committee will agree that

this country needs more savings. The Lord President of the Council says that workers should buy savings certificates and not football coupons. That is oneway of getting more savings. This Clause is clearly a way of encouraging a certain kind of savings—company savings—and what the Committee have to consider is whether, against the background of the need for more savings, it is a sensible thing to encourage this kind of savings, through company reserves. I would not argue that if the 10 per cent. tax were taken off, exactly the £60 million would be saved in company reserves. Here and there we should find a company which would increase its distribution, but such companies would be the exceptions. Nearly the whole of the £60 million would find their way into company reserves.
We need more savings than ever. That means that I do not believe that the prewar rate of savings was at all satisfactory. The party opposite are always telling us into what poor shape industrial equipment was allowed to get before the war. If they say that—and I am with them to a very large extent; not in the case of all industries, but in many—then it follows that the rate of savings before the war was not enough, and we have not only to save a sufficient amount in pounds today to make up for the rise in prices, but also to make up the leeway of the war and some leeway from before the war, and that means very large sums indeed.
5.0 p.m.
One source of savings has been drying up for some time, and that is the rich saver. The rich individual cannot save now because taxes on his income and Death Duties are too high. I do not for one moment expect or hope that they will go back to the levels they were at before the war—that would be a false assumption—so we must ask ourselves this question: if that source of savings is drying up, the individual savings of people who are comparatively or very rich, what kind of savings can we put in their place?
I am sure it will be argued, and at first sight it is rather plausible, that the small saver and the Budget surplus can take the place of the large saver. I think it is true that from those two sources it would be quite possible to collect in money as much as the big saver would have put by under the old rates of taxation, but that


is not the end of the story, because the small saver and the Government do not use savings in the same way for risk capital and for promoting new business as does the large saver.
The small saver must have liquidity. I think it will be found by those who study savings groups in factories that more and more the savings are being put by for purposes such as summer holidays or Christmas. The National Savings Movement is being used now more as a temporary home for building up a fund, and those in charge of savings groups, who have done such excellent work in the movement, have admitted that to me when I have talked to them in my part of the world. Those savings will not do the same job as the savings of the individual who was prepared to tie up his money for some time in a new process.

Mr. Albu: But do not some of those small savings find their way into risk capital through industrial assurance companies?

Mr. Eccles: To some extent that is true, but I do not think they do so in the quantity or in the type of risk, because when an industrial assurance company is investing other people's money they will naturally be more prudent as to what they put it into than an individual who says, "There is a high prize if I win, so I will have a go." Here I think the hon. and learned Member for Kettering made a good point when he said that perhaps this tax might be looked on as a transfer of money from the hands of industry to the hands of the Government. But I do not take the view which he does that the Government are an exceedingly good investor. I think it would be better to have telephones than groundnuts.

An Hon. Member: We have not got any groundnuts.

Mr. Jenkins: Risk capital.

Mr. Eccles: I think the Government can take risks but takes them badly, and the small saver cannot take risks because it is not advisable to do so with a little money. We know, for instance, that some of the new institutions in the City over which Lord Piercy presides are attempts at substitutes for the old big saver. I do not think these attempts to

find substitutes for the source of risk capital have been successful; in fact, as time goes on they will less and less fill that rôle.

Mr. Mitchison: Would the hon. Gentleman allow me to interrupt? I suggest that in a democratic country the Government of the day, whatever that Government is, ought to have the choice of investment. In other words, the test of the best investment in a democratic country is not necessarily the most successful investment.

Mr. Eccles: I think the Committee should be grateful to the hon. and learned Gentleman for interrupting, because he is saying quite plainly that the Government know best about all these things, and that is a proposition which divides both sides of the Committee. I do not agree with him that a Government is the right single organ to make decisions on all these new ventures. If the hon. and learned Member holds that view, he will find it difficult to put across to the electorate of this country the new doctrine of the Lord President that a large section of private enterprise should be allowed to exist and should even be welcomed by the Labour Party. Because if there is to be a flourishing sector of our economy in private hands, and that is to be looked on as a reasonable way of producing wealth, then we must adapt the capital system to enable those people to carry out their functions.

Mr. Mitchison: indicated dissent.

Mr. Eccles: If the hon. and learned Gentleman will give it a little thought he will find that if there is centralised in the Government the decision about all capital investment, private enterprise will be killed, not at once but as soon as the big companies fail to have any more reserves. That may be the policy of hon. Gentlemen opposite but it is not mine. I believe that the prosperity of this country depends on a high birth rate of businesses and a low infant mortality rate amongst them, and for that it is absolutely necessary that retained profits should be encouraged.

Mr. Blackburn: Will the hon. Gentleman forgive me? Trading profits last year were three times as great as they were in 1938—

Mr. Bracken: Does the hon. Gentleman mean the groundnut scheme?

Mr. Blackburn: —so the retained profits must have been much more than they were before the war.

Mr. Eccles: Yes, but so is the cost of a ship, and the purely industrial problem with which we have to concern ourselves is whether the net sums after taxation are or are not sufficient to keep our industrial equipment up to the best of other countries. The contention of my right hon. and hon. Friends is that they are not at the present time. The fact that they are not is concealed by a world boom because during that boom one can continue to sell on easily won profit margins because the demand for goods exceeds the supply. We are concerned with looking forward to the time when there is much greater competition in shipping and then it will be too late suddenly to say, "Let us build some new ships" because they take several years to build and we shall be caught by any recession that comes not as well equipped as we might be.

This question of more risk capital and of having sufficient reserves, which is bound up with our new Clause, does not worry the big company as much as the small company. The big company suffers on account of the replacement of its capital assets but, if it has a long and established dividend paying record, it is easier for it to go to the market and get more capital or to borrow from the banks. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) presides over one of our largest companies with distinction, but Associated Electrical Industries did not start as a large company. I imagine it started as a variety of small companies which in time were built up and then became a large, one.

I am concerned that more prospective large companies should make a start, and the taxing of profits put to reserve is a real handicap upon the small man when he is starting. He may have to take money out of the business because his family may be growing at the same time as his business. I should like to help the small business in other ways, but that is not, perhaps, a subject which it would be in order to discuss now. But here is one way in which we could help the smaller business to accumulate the reserves without

which it always finds it difficult especially when times become less easy, to stand up to the big ones.

If the policy of this country was to nationalise everything, we need not worry about company reserves. Then, clearly, the provision of new capital would be made by the State through taxation and the Budget surplus; the Budget surpluses could be invested in the coal industry and in all other industries. If they were all nationalised the question would not arise.

On the other hand, if the policy is to concentrate private business into single large units—one multiple shop, let us say, buying up all the little ones—then also this would be a good tax because it is definitely in favour of the big man against the little man. I do not know whether there may be some hon. Gentlemen opposite who, although they have all abandoned nationalisation—or so we are to be told, I believe—may still think it a good thing that one multiple shop should acquire all the little shops, in which case they will favour this tax because there is no doubt that the Co-ops. could stand this Profits Tax a great deal better than could the small shops.

We have different views on this side of the Committee. We say that we must face the fact that big savers as a source of saving will not be as important again as they were, and that savings through company reserves are the nearest substitute that we can get. In my view, this is not adequate. I do not think that risk-taking is so easy with other people's money as it is with one's own, but still it is the nearest substitute we can get.

Mr. Follick: Are not big companies big savers?

Mr. Eccles: Perhaps I did not make myself clear. I meant individual savers. I thank the hon. Member.
I come now to my last point, the question of equity. The hon. and learned Member for Kettering said that if the tax were removed the trade unionists in this country would say, and rightly say, that that was unfair on them. I do not think that he should have used the word "rightly," because his hon. Friend the Member for Edmonton (Mr. Albu) said that in the national interest we should take the tax off but that there were psychological resistances. Surely, if that is so, it is the duty of all of us to do


our best to explain to the trade unionists and to all those who hold the view that there is a conflict between profits and wages, which I do not believe to be true; nor do the trade unions in the United States.

Mr. Albu: I did not say that there was a psychological conflict. I said that there was a real conflict of social equity.

Mr. Eccles: What one means by "social equity" is, I think, an idea that one holds—a principle, if you like; and it must be the conflict with the idea that one holds that causes the feeling that this would be a one-sided and unfair thing to do.
I quite believe in the psychological resistances, but my view is that the point of the American trade unionists about high wages and high profits going hand in hand is the right one in the interests of our working people and that we suffer very much now because the party opposite, in their long struggle to get into power, found it useful to give to profits this bad sense and to make out that there was this tremendous conflict between profits and the working people.

Mr. Mitchison: What about the schoolmaster, who makes no profit?

Mr. Bracken: Why do you not look after him?

Mr. Eccles: The best chance which the schoolmaster has of getting his salary raised is that the national income and the Revenue should go up; then there would be more money to pay civil servants. Therefore, if we could only get rid of party politics in this matter of what it is that increases the national income, we would all do ourselves a lot of good.
5.15 p.m.
I fully see the difficulty of a party which for years and years have supported the doctrine that there is a conflict of interest between profits and wages. They might ask themselves how it is that that view is not taken in America. Why do they think that the trade unionists in America utterly disagree with them on this interesting point of the true relation between profits and wages? I am not prepared to lie down in front of this psychological barrier which has been erected and say that I cannot get over it.
I am convinced that, as my hon. Friend the Member for Stockport, South (Sir A. Gridley) said, this is a very important matter in the national interests. It is an important matter that we should not only get our costs down in the processes that are going on today, but that we should start new processes and find new ways of making goods which the world wants to buy. For that reason, we must have an adequate stream of savings which those who own the savings are able and willing to invest in risky business and take chances. I say that the method of the company reserve is probably the best method we have. For that reason—I apologise for being so long—I commend the Clause to the Committee as something which is really in the interests of our people.

Mr. Jenkins: I was distressed to hear the hon. Member for Chippenham (Mr. Eccles) begin his speech in reply to my hon. Friend the Member for Oldham, West (Mr. Leslie Hale) by saying that we ought to prepare for a slump in America which would make the recession of last summer look something very small indeed. We know that the hon. Member has no faith in the virtues of Socialist planning, but it does not appear that he has very much faith in the virtues of capitalist planning either—that is his prediction for the future.
The right hon. Member for Warwick and Leamington (Mr. Eden) commended the Clause to the Committee on the ground that we all wanted a high level of capital investment. That is, of course, true, but we have to consider not only what level of capital investment we want, but also in what directions we want that capital investment to go. I could not for one moment—and I join issue straight away with the hon. Member for Chippenham—accept the criterion that profitability was the only test so far as capital investment was concerned. I really do not believe that if they had thought about it all hon. Members, at any rate on the opposite side of the Committee, could accept that criterion either.
To look back for just a short time, do they really think that in the 1930's, when such capital investment as went on was determined by what was or was not profitable, it was desirable that there should have been all the light industry capital investment around London which was


profitable, rather than some heavy industry capital investment in the distressed areas? Do they really take that view? Do they really believe that at present it is desirable that any industry—greyhound racing tracks, cinema companies, or any think of that sort—should be allowed to indulge in capital investment to any extent they like provided that they find the investment profitable?

Mr. Bracken: What about your groundnut scheme?

Mr. Jenkins: That is the third completely irrelevant interruption which we have had from the right hon. Gentleman this afternoon. I do not think that the Opposition can have it both ways in claiming that the Government never take any risks and then attacking us on groundnuts.
It is, I think, ground for common agreement that money which goes into building up the Budget surplus goes to pay for our capital investment programme just as much as does money which is ploughed back into the reserves of companies. But of course, in the case of a Budget surplus, the Government retain a good deal more control over how those funds will be invested than is the case if this tax were to be removed and more money were allowed to be ploughed back into the reserves of businesses.
The Budget surplus might be used in one of a number of ways. It could be used to pay for investment in nationalised industries or it could, in a roundabout way, equally well be used to pay for investment in private industry; at least the Government have some control over the way in which it is used; whereas it seems to me that if we were to accept the Clause, at a time when we are nowhere in a deflationary situation, and when there is pressure on our total investment resources, then the Government would have less and less control over the direction of capital investment.
If we got into a situation in which some slight cut in the capital investment programme was necessary, the only thing that could be done would be to make the nationalised industries bear that cut [An HON. MEMBER: "Or housing."] Or housing, but so far as industrial investment is concerned, only the nationalised industries because that would be the only field in which the Government would

have control. I was amazed to hear the hon. Member for Stockport, South (Sir A. Gridley) talk most eloquently of the vital importance of electricity investment as though that was an argument for this new Clause. One result of the carrying into law of this new Clause would be to place the electricity investment programme in jeopardy.
I do not say that in all situations and at all times one need resist a Clause of this sort. If we began to get into a deflationary situation it might be right to accept such a Clause as this. I do not think that that situation has yet arisen. If it did arise it would bring with it important questions bearing on the point which my hon. Friend the Member for Edmonton (Mr. Albu) made earlier today, namely, that one has to consider not only the economic consequences of measures for ploughing back profits but also the social consequences, the fact that if private companies are allowed to plough back these profits that will not only aid the nation's capital investment programme but will also greatly enrich the shareholders of the companies concerned. I do not say that that is a reason why one should never allow profits to be ploughed back, but one cannot look at the matter from a purely economic point of view. We must look at the social point of view and work out a solution of that before we can allow people to plough back profits without limit.

Mr. H. Strauss: We have heard a number of speeches this afternoon from Gentlemen on both sides of the Committee who have great experience of joint stock companies as directors, advisers, etc. I am, I think, one of the first to address the Committee with no such experience or expert knowledge. Nevertheless I would ask the Committee to listen to me with patience because a number of terms have been used with which I have been professionally familiar, words like justice and equity. We have on other occasions heard a number of speeches about social justice, and this afternoon we heard a speech from the hon. Member for Edmonton (Mr. Albu) and other speeches about social equity.
I have been very much interested to know what is the relation of social justice and social equity to the justice and equity known to the law. I was a good deal helped by a recent Ministerial statement


in another place when one of His Majesty's Ministers, answering an interruption asking what was the relation of social justice to justice, replied that the relation of social justice to justice was the same as the relation of social credit to credit. That was just about true. Social equity, as explained by the hon. Member for Edmonton, has the same relation to equity as social credit has to credit.
What was there equitable about the doctrine of the hon. Member for Edmonton? What is his case against joint stock companies making profits? Because he was making a thoughtful speech on this subject, and I wished to follow him, I ventured to interrupt him on one occasion in order to clarify his speech. I asked him whether he was convinced that it was contrary to the public interest that the assets of joint stock companies should be increased. From his answer I gather that he thought that it was, at present, contrary to the public interest, but that in the event of a quite new company law being passed that might no longer be the case. I do not criticise him for not telling us what the new company law was to be, because I assume that he would not have been in order in doing so.
Let us note the prejudice which the hon. Member threw into his speech. He referred to shareholders. "Absentee shareholders" he called them, which, if it means anything, means that they do not live in the factory. Why, if one believes in the great machinery of a joint stock company, one should think that the shareholders would be serving the public interest better if they lived in the factory, I do not know. The purpose of the whole machinery of the joint stock company is to enable the ownership of the company to be very widely spread. Nevertheless, the hon. Member managed to throw some prejudice against shareholders by referring to them, in this ludicrous phrase, as "absentee shareholders."

Mr. Jenkins: As my hon. Friend the Member for Edmonton is not here, I would say that I thought it was absolutely clear that by absentee shareholders he meant, not people who did not live in the factory but people who never bothered to attend the annual meeting and played no

conceivable part in the running of the affairs of the company.

Mr. Strauss: I hope that the hon. Member for Edmonton will be grateful to his hon. Friend the Member for Stechford (Mr. Jenkins) for explaining what he thinks his hon. Friend meant. But the hon. Member for Edmonton said nothing of the sort, and I very much doubt whether shareholders perform a much more useful function by attending every company meeting than by getting on with their business.
What is the real objection to this new Clause? It is that it deals with profits. Hon. Members say that anything that helps profits, or removes some attack upon profits, would have a deplorable psychological effect. I wish hon. Members opposite would ultimately make it clear in their philosophy whether, in their opinion, profits are a good thing or a bad thing. As long as they vary from the one view to the other, it is very confusing to everybody who is trying to follow their thought, if I may thus describe what goes on in their minds. In the light of a great deal of their discussion, one would think that profits and profit-seeking were a great evil, and I am bound to say that we must all admit that, if the object of nationalisation is to avoid profits, that object has been achieved. Nevertheless, just as I think I understand the Socialist philosophy that lies behind their feeling towards the proposed new Clause and similar proposals, something happens that makes one wonder whether one has understood them correctly.
It may be remembered, if I may use this only as an illustration of the point, that there was an occasion not so very long ago, which will be in the memory of many Members, when an order was to be brought forward dealing with labour and registration for employment. It was referred to in advance as the "spivs' order." I remember venturing to ask the Leader of the House whether that was quite the expression to apply to research workers on their own account, writers, artists, sculptors, etc. When that order for the registration of workers was made an explanatory leaflet was issued by the Government. It explained that one avoided all risk of coming under the order if one was "gainfully employed." Provided you could prove that your whole object in life was the profit motive, you escaped the order.


If you were not governed by the profit motive then, of course, you were a "spiv."
I implore the Government to try to clear up their ideas on this subject. This idea that a joint stock company should not be allowed to make or retain profits is not only neither equity nor justice; it is not even social equity or social justice, whatever they may be.

5.30 p.m.

Mr. Jack Jones: Common sense?

Mr. Strauss: It is certainly, above all, not common sense. I agree with one remark made by the hon. Member who immediately preceded me. He was conscious, as I think the whole Committee should be conscious, of the dangers of inflation and of the effects of inflation. What is the effect of that? The effect of that, of course, is that profits are much too easy to make. If the Government would only end inflation, profits would become much more difficult to make. I say the Government are wrong in two respects. They cause and permit inflation, which makes profits easy to make, and then take them away to prevent them from being distributed. I say their policy should be precisely the opposite; to avoid inflation and to ensure that profits shall be the reward of efficiency and of nothing else. But, when they have thus ensured that profits are more difficult to make, it is in the public interest that companies which do make profits in those circumstances should be allowed to retain and to benefit from them.
Examples have been given by previous speakers of how in the past companies have made most profits whose prices to the consumer have been cheapest and whose payments to the workers in wages have been highest. It is an absolute illusion to think that a good public service is not served by good profits. My right hon. Friend who moved this new Clause pointed out that it was so designed that the gain to the company, if the Clause were passed, would not be used in the payment of dividends. Some doubt has been thrown on that by various speakers. They have suggested that to some extent this benefit would be so used. Let us consider what would be the effect if they were right. What is their doctrine about limiting the dividends paid to ordinary shareholders in such a manner that their

real reward for investment in the industry goes continually down as prices go up? What would the worker in the industry say if his reward in wages were nominally the same as it had been before the last war, as is the case with very many shareholders? Of course he would say that it was preposterously unjust, and he would be quite right.
If dividends were to be permanently limited—and that was the suggestion of the hon. Member for Edmonton as I understood his proposal—not only would it not be equitable, it would be utterly inequitable. Of course, if one lends to a company at a fixed rate on debentures, one never gets a greater reward, but, if one takes a risk by investing in ordinary shares so that if the enterprise goes wrong one loses everything, surely, if the enterprise goes right, a reward should result from it. I believe that some writings of Socialist economists themselves, some of their works written for students, point out the grave evils of the Profits Tax. Yet, when we come on an afternoon like this to discuss this proposed new Clause, they assume that the profits of joint stock companies should be subject to a great imposition to which no other sort of profit is liable. What is the logic of that? I say there is no logic about it at all, and it has the most serious consequences to our economy.
Many hon. Members, and indeed the opening speech in favour of this new Clause, have pointed out the very grave difficulty of even maintaining necessary assets. I wonder whether those, who have addressed the Committee from the other side and thought the matter so simple, have thought about the position that, for example, a prosperous company like the Cunard Company will be in, when it has to replace its ships. I do not believe those matters have been considered at all. I wish to deal with one point made by the hon. Member for Oldham, West (Mr. Leslie Hale). He, in a very racy and vigorous speech, which, I must assume for the purposes of argument, was seriously intended, suggested that we on this side of the Committee have continuously—

Mr. Follick: The hon. and learned Member was speaking just now about the great prosperity of the Cunard Line. After all is said and done, the great prosperity of the Cunard Line is due


to my right hon. Friend sitting beside me, the right hon. Member for Dunbartonshire, East (Mr. Kirkwood).

Mr. Strauss: The right hon. Member is one who has returned to the House after an indisposition and we are all most happy in this Committee to see him back. Some of us who were in a previous Parliament know how energetic he was in trying to get a certain ship built by that great company—

Mr. Jack Jones: And he did.

Mr. Strauss: Any credit the right hon. Member likes to claim for himself—and I do not think he will claim for himself the supreme credit for what, after all, was granted by a predominantly Conservative Government—any credit that belongs to him I give to him most willingly, but that matter has about as much to do with my argument, as I am sure the right hon. Member will agree, as has the man in the moon.

Mr. Osborne: Or the man sitting next to the right hon. Member.

Mr. Strauss: I was dealing with the speech of the hon. Member for Oldham, West, who said that we on these benches had made prophecies of woe and of imminent disaster. If we did, we were doing so in company with those whom hon. Members opposite respect, and, after all, none of us has said anything nearly as alarming as was said in this House and elsewhere by the Chancellor of the Exchequer last October. I have a whole sheaf of quotations here, but even if you, Sir Charles, would allow me to read them—and I do not know whether you would—I do not propose to trespass on your patience or on that of the Committee, but it is really too much when the hon. Member for Oldham, West, treats us as if we were prophets of disaster, and wholly omits the prophecies of the right ion. and learned Gentleman the Chancellor of the Exchequer.
I thank the Committee for the patience with which they have heard my remarks and I ask the Committee to realise that this is one of the most serious new Clauses which have been put forward. Unless something is done on these lines the whole commercial prosperity and ultimately

even the economic survival of this country is threatened. Suppose hon. Members opposite proposed to nationalise everything—and I gather that since Dorking it is much nearer the truth to say that they propose to nationalise nothing, at least until they have got into power—then the fate of private industry might not matter. But so long as they leave 80 per cent. of our industry or anything like that figure to private enterprise and to the enterprise of joint stock companies on whom alone this tax falls, and leave to private industry the export trade on which our survival depends, then they must not ruin the prospects of that private sector of industry because of an obsession with the word "profit," about which they have such contradictory notions.

Mr. Jack Jones: I wish to say a word in order to obtain some clarity on this subject. As an ordinary worker not used to dealing in high finance or with joint stock holding companies, nor the other paraphernalia and jargon used by the hon. and learned Member for Norwich, South (Mr. H. Strauss), I want to see exactly what the new Clause seeks to do. If I am right, the position is that hon. Gentlemen opposite seek to retain all the profit made by various companies engaged in making profit and doing with it what they so wish—[HON. MEMBERS: "No."] That seems to me to be the interpretation of the speeches as I have heard them. In other words, the Government would not take unto itself that proportion they would desire to have for the purpose of carrying out the intention of the Government so far as capital expenditure is involved.
I listened carefully to all these speeches, particularly that of the hon. Member for Stockport, South (Sir A. Gridley) who usually talks good sound common sense arising from a sound commonsense training in industry. He told the House that his particular concern was the bringing down of the costs of production—a very laudable thing. Then he told the House something it knew to its cost, that the American worker has three times the power at his disposal that the British worker has, especially electrical power. One would assume from that that the Socialist Government are to blame for that fact. When there were cuts in the lighting because the electrical power was not forthcoming, are we to


assume that the Socialist Government should be accused of having been inefficient about generating plants? The right hon. Member for Aldershot (Mr. Lyttelton) more than anybody else in this House knows the reason why we were short of generating plant and telephones, etc., necessary for the full employment programme.
The hon. Member for Oldham, West (Mr. Leslie Hale) complained bitterly, and rightly so, that orders placed inside our own country for textiles were not of the magnitude he would have them to be. The firm he referred to did make a tremendous effort to get owners of textile industries, particularly in Lancashire, to place orders. Some of us sought the reason why orders were not placed, and the facts are that the controlling interest in Lancashire, the G.E.M. said. "Unless we can get operatives to cease coming and saying, 'We want new machinery and less hours of work,' and unless they will use that machinery, we are not going to place orders, because we shall not get our capital back and we cannot get redeployment, shifts and so on and so forth." I could make quite a speech on the subject—

Mr. Walter Fletcher: Does not the hon. Gentleman think it a little disingenuous that neither he nor the hon. Member for Oldham, West, brought forward one of the real reasons why orders are not placed and that is the competition from Japan and India and other cheap labour areas?

Mr. Jones: That is an additional burden placed upon that particular industry, the fear of competition, and that fear is one which should get the operatives and the owners to respond by putting in new machinery and the necessary hours and everything else to meet that competition But that is getting away from the subject we are discussing.
I hope the Government will resist this new Clause on the ground that this Socialist Government should pay regard first and foremost to the need for its capital expenditure, to use whatever there is in the way of spare wealth to the furthering of the Socialist economy; and thereafter to allow private enterprise to seek to suit the purpose of the shareholders and all those connected with it.

5.45 p.m.

Mr. Macdonald: I should like to make these few remarks from a non-party attitude. I see one or two hon. Gentlemen opposite smiling, but it is possible sometimes for a Liberal to be non-party.
I believe the main consideration of this Committee is to maintain a full employment policy. How can that be maintained if industry is not allowed to be thoroughly efficient? Due to the geographical situation of this island and the fact that in a sense we live an artificial life—because we grow very little of the raw material we need for our multitude of industries-but have to import it—we have to be-more efficient than any other manufacturing country in the world in the production of our goods. The only way we can be efficient is if we can put back into industry the necessary amount of money to see that we have the best types of machinery and the best research laboratories so that we can keep on reducing the price of our products and yet make them more efficiently than anywhere else in the world.
I have a financial interest in an industry which before the war was the largest exporter of its kind in the world. We were only able to beat our competitors in the United States and elsewhere by the fact that for a great many years we had realised we must not spend the profits that we made, apart from a reasonably small amount, but plough them back into laboratory research, machinery and so on. Then the war overtook us and, like most other industries we were completely organised for full war production. The result was that research for peace-time needs had to be discontinued and our machinery as an industry suffered badly from its immense war-time production.
During that time the Americans had been our wonderful allies but they had not been geared to anything like the extent of war production that we were. As a result they were able to go on with research for peace-time needs, so that when the war finished they were miles, ahead. We have been fighting hard, and I am speaking of all those industries who need to import their raw materials, and therefore for whom the cost of raw materials plays a large part in their total cost of production.
All those industries are fighting hard to maintain their place in the export trade, and by doing that to maintain their full employment policy. They cannot continue that struggle as they would wish to do unless they can have sufficient capital, sufficient profits, ploughed back into industry. The hon. Member for Stockport, South (Sir A. Gridley) asked the Committee this afternoon to forget about the question of profits for a moment. I think he was being perfectly sincere when he said that, and I am being equally sincere when I say that profits are a minor side to the question of maintaining industry and therefore maintaining full employment for the people of this country.
The hon. and learned Member for Kettering (Mr. Mitchison) stated it was far better to give the Government the opportunity of capital expenditure rather than that industry should have it, and he cited the case of sewerage, telephones and many other things of that type which are necessary and vital. But they have to be paid for and how can they be installed if industry, which is the biggest taxpayer, both direct and indirect, is not allowed to be efficient? Therefore I hope that the Committee will agree to a substantial reduction of this tax on undistributed profits. It is in the interests of every section of the community that this tax should be reduced, and I hope that, in the not too distant future, it will be done away with entirely.
I ask hon. Members opposite to realise that there is no sinister intention behind such a statement and that there is no idea of vastly increasing the dividends that will be distributed as a result. The average manufacturer in this country and the executives of firms all realise that they must keep their companies efficient, and I assure hon. Members opposite that they are less interested in earning larger dividends, upon which they would have to pay a high rate of taxation, than they are in keeping their businesses sound. Full employment should be the keynote of policy on all sides of this Committee, but full employment can only be maintained if industry is allowed to be efficient, and it can only be efficient if it has sufficient money ploughed back into its operations.

Mr. John McKay: I have listened with great attention to this discussion, and I have noted particularly

that the Conservative Party has emphasised, and rightly in some respects, that this is one of the vital new Clauses to this Finance Bill and that it is absolutely essential, at the present time, that something should be done on these lines to enable industry to obtain greater supplies of new capital. The Opposition are attempting to emphasise that it is not only necessary, for capital itself and private companies to get on with their job, but they coupled with that proposition the suggestion that, unless we have industry producing, and producing well, the whole of the country is not likely to be in the best possible condition. Therefore, it is on a national basis that they are making this appeal.
It is right to say that, if any great political party puts forward some suggestion which they think it is absolutely essential, not only in its own interests but in the interests of the country to propound, it is in the general interests of the country that that suggestion should be considered. One might have expected, however, that, if this idea was so vital, instead of attempting to weaken the position of the Exchequer, so that there might be a better possibility of extracting this vital relief which they suggest, they would have concentrated on that point alone, but what do we find? We find that in every proposal or suggestion which the Opposition have put forward in the last few days, they have always been asking for more money to come out of the Treasury, and, to the extent that they might have succeeded, they would have been weakening the position of the Treasury to grant the relief for which they asked.
I was reading in HANSARD the other day that a certain policy was being suggested and defended by the Opposition Front Bench when, in my view, the speakers were quite unaware of the financial liability to the Exchequer of what they were proposing. The Financial Secretary had to inform them that the proposal which they put forward was going to add a liability of £103 million to the Exchequer. It appears to me that there must be a tremendous amount of inconsistency about the policy of the Conservative Party at the present time.
Let us see what this proposal means and what it implies. All the speeches from the benches opposite have painted


a picture of industrial conditions in this country as being so difficult and so hard that industry ought at this time to receive some special relief not granted to any other section of the community. I do not pretend to be a financial expert. [Laughter.] Many hon. Members who are now laughing are perhaps not financiers, either. I have read the "Economist" weekly for several years. What has been the particular point which it has emphasised? It has been the question of profits and wages, the differences that have developed between the one and the other, and a comparison of wages with profits. We always notice a tearful tone about any discussion of the Excess Profits Tax, and how handicapped industry is on account of it.
The "Economist" has been painting that picture year by year, indicating that, while wages were rising, so were profits, and it used to compare the rise in wages with the profits after taxation had been paid. Even then, it was advocated that the profits had been increasing month by month and year by year, after taxation had been paid. That was the general picture throughout the last few years—that profits have been increasing—and at the end of last year the "Economist" was telling us that, as far as it could calculate, profits had reached their peak.
Now, it is explaining, after analysing the situation, that profits are still rising and have still not yet reached their peak. At this time, when we have any amount of difficulties arising out of the war, when we are buying new machinery in order to improve the productive power of industry—and this is a fact that no one will deny—we are paying very much more for these capital goods than we used to do. It is one of the difficulties we have to face.
The chief point we have to consider, however, is that we have been striving for several years now in order to balance the position between the owners of industry and the other capital which is invested in industry—the human capital. We have been attempting so to balance the position and to give satisfaction, not only to the owners of industry, but, by means of taxation itself, to retain the balance and preserve some security for the people who work in industry.
That is necessary in order that we, as trade union leaders, may go back to the

industrial workers and explain to them, not only the national position, but also the reasons why we see the necessity for even better conditions for the wage earners. We have to say that unfortunately the national position is such that we recommend the workers to try to keep down their demands and to keep the wheels of production moving. That is a great national necessity.
6.0 p.m.
Yet at this very time the Conservative Party is continuously making suggestions which, in the main, tend to help people who are in a much better condition than the ordinary workers. Now they make this special suggestion asking the Comittee, at this stage in our battle for improvement and national balance, to give £60 million special relief to industry. It is not to be given to the workers, the human capital, but to investors in the economic field. What should we, as Socialists, tell our people if we agreed to that?
What is £60 million spread over the whole of the investments of the country? Undoubtedly it would be a relief, but is that the only kind of relief that is needed? No. [Laughter.] That is something to laugh at, is it not? What could £60 million do for our aged people? It could give them 5s. a week extra income. Would not that be more beneficial than giving the money to industries which are in a prosperous condition? This suggestion is not made because industry is in a bad condition. How could it be? How could hon. Gentlemen opposite show to the ordinary intelligent citizen that there is some great special need to give relief to companies when the whole trend of the figures indicates that they are in a prosperous-condition?
We must consider the psychological outlook of our people. We must be careful that we do not upset the workers in industry in such a way that they overrule their advisers and begin demanding reliefs because of what we are doing in this Committee. If we agree to this new Clause, we shall overbalance the position and upset the workers. They will make demands. They will say, "If you as politicians are prepared to do this now, and yet want men who are getting £4 12s. a week to continue at that wage and to keep silent"—

The Deputy-Chairman (Colonel Sir Charles MacAndrew): Order. I have


allowed the hon. Member a great deal of latitude. I think that he is going rather beyond the new Clause now.

Mr. McKay: I think that I have emphasised sufficiently the point I wanted to drive home. This is not the time for a move of this sort when, despite all difficulties, industry is in a prosperous condition. The question of supplying capital can be met if the companies, instead of paying big dividends, reduce them and put the money into the business.

Mr. Lyttelton: I shall not follow in all its intricacies the argument which has been deployed by the hon. Member for Wallsend (Mr. McKay), but I think I shall show in the course of my remarks that the objects which he has in mind, and which are shared by everybody in the Committee—namely, that we should have high wages and a highly prosperous country—will be promoted by this new Clause. I was very glad to hear the speech of the hon. Member for Rotherham (Mr. Jack Jones) which was entirely devoted to arguments in favour of this Clause. He spent most of his speech complaining that capital re-equipment in certain parts of the country was insufficient. The object of this Clause is precisely to facilitate that re-equipment.

Mr. Jack Jones: I spent a little while explaining why those who are responsible for capital re-equipment did not do it—not because it should not be done or could not be done, but why they did not do it.

Mr. Lyttelton: That is what I was saying. The idea behind this Clause is to facilitate capital re-equipment. I am so glad that I carry the hon. Member for Rotherham with me on this occasion, as I did so often when we were considering the Iron and Steel Bill.
I should like to put some serious arguments. First, it is clear that we are very short of labour at the moment. That is a situation which I find very agreeable on the human side, because many of our human problems are solved by it. But underlying all that is the need for productivity, with which we all agree. It appears to me that there are only three ways by which we can get increased productivity—longer hours, harder work during working hours, and greater mechanisation and greater use of power

at the bench and the lathe. This Clause is concerned with the third of those means of raising productivity.
I have just received some figures which are remarkable. I received them from what I might call an unofficial Anglo-American team on productivity. They are accurate figures. I should like hon. Members to consider them. They show that on a particular product the British cost was 65 per cent. below the American cost, but the man-hours worked in Britain were over 90 per cent. above those worked on an almost identical product in the United States—65 per cent. lower cost and 90 per cent. higher man-hours. How are these differences made up? This is in a highly efficient production, and the difference is made up by the fact that the American operative takes home at the end of the week four times the wage of the British worker in the comparable industry, although the British worker is highly paid by our standards.
That underlines what I want to say. It is a total illusion to suppose, as did the hon. Member for Wallsend, the hon. Member for Oldham, West (Mr. Leslie Hale), and I think the hon. Member for Rotherham, that there is a conflict between the needs of capital re-equipment and the needs of the workers.

Mr. Leslie Hale: Surely, the right hon. Gentleman will not pass that by without saying that the American Press today is making it clear that £25 a week is about the minimum sum on which it is possible for an artisan to live in an American industrial town?

Mr. Lyttelton: I have never seen that in the American Press, nor is there a shadow of economic support for it. That is not germane to the argument. I think that I should carry the whole Committee with me in saying that it surely must be a national objective to equip the most skilful body of workpeople in the world with the very best tools which we can provide. If any hon. Member dissents from that, I will give way to him. I should have thought that was obvious, and I am surprised that the hon. Member for Oldham, West should try and prove something else.
Before I come to this tax on undistributed profits, let me say that re-equipment on modern lines is not a sort of once-for-all operation. It must be a


continuous process from month to month, and from year to year. We cannot make great spurts and then imagine that we can get into a period of comparative ease. It has to go on all the time. This is a tax on undistributed profits; it is a tax upon new tools and new handling, and, with regard to trading concerns, it is a tax upon the ability of that trade to try and finance new stock, because undistributed profits are almost always money invested in the business, except in companies which are declining or which are only static.
I do not want to follow the rather tortuous arguments of the hon. and learned Member for Kettering (Mr. Mitchison), whom I am glad to see in his place, but I wish to refer to them before going on to something else. He was really at cross-purposes with the whole thing when he said that the Government—and he used the instance of the telephone—ought to have this money because they ought to invest it. But the Government do not really make telephones. Private companies do that, and the object of this Clause is that the telephone companies may be able to have new plant in order to accelerate the manufacture of telephones.
I must, I am afraid, bore the Committee with some figures and technicalities. I think we should all agree that plant—cranes, boilers, motors, machines, lathes, planers, borers, millers, and so forth—have gone up in cost since the war by from 200 to 300 per cent., and, of course, foreign imported machinery has gone up even more since devaluation. Depreciation and wear and tear allowances are allowed on what is now called "historical cost." Therefore, businesses have to provide, whenever they replace tools, the difference between the original cost—written down, of course, in the meanwhile—and the replacement cost. But the real point is that this has to be done out of taxed profits. This is why I say that the tax is a tax on replacement, and is uneconomic in every respect. It is just as much against the interest of the workpeople as against the interest of the general economic picture.
I apologise deeply for wearying the Committee with figures, and we have, perhaps, got some way from them this afternoon. But I should like the Committee to visualise a company with a

capital of £100,000, £80,000 of which represents plant and machinery at 1938 prices. Since 1938, it will have received in depreciation allowances, wear and tear allowances, about £60,000 and will have written down its plant to about £20,000. But it is now, let us suppose, faced with the need to replace the whole of its plant during the next five years. This will cost it about £200,000 at today's prices, and, on the assumption that it has been able to put aside the £60,000 I have mentioned, it will have to find £140,000 for the new plant.

Mr. John Lewis: The right hon. Gentleman has not taken into account that there are five more years' depreciation.

Mr. Lyttelton: I am taking it up to this point. The hon. Gentleman will find that the argument is perfectly accurate, if he will allow me to continue. The company has to find £140,000 during the next five years. It is quite true that once it has spent the money, depreciation allowances tend to go up. That is a perfectly fair point, and it might get another £10,000 when it sells its old plant as scrap.
Let us suppose that in 1949 the company makes the high rate of a profit of £35,000 a year gross on its capital of £100,000, and pays a dividend of, say, 10 per cent., which absorbs £10,000. I have calculated that its Profits Tax and Income Tax will amount to about £17,000, so that after paying its net dividend it will be left with an undistributed profit of £12,500. This means that it will take 10 years instead of five to replace the plant, although there is some alteration in the calculation in the future as the hon. Gentleman said. Therefore, the company is really faced with one of two alternatives, either to work for 10 years with plant which ought to be replaced in five, or to raise new capital.
6.15 p.m.
The point was touched on by the hon. Member for Edmonton (M. Albu) that the burden of these taxes bears far more heavily upon the new small developing businesses than upon the well matured ones which have had a long time in which to accumulate reserves in other days at lower rates of tax, and have been able to write down their plant. In his remarks he made some reference to absentee


shareholders. I hoped that in a very thoughtful speech which was intended to make a contribution to our Debate, he would get away from those catch phrases. Of course, shareholders are absentees. We might just as well complain of shareholders being absent as to complain here about absentee constituents. It would be very difficult to conduct the Business of this House if we brought our constituents with us all the time.

Mr. Albu: I think we agree that we are all elected by our constituents, but I think it is a fact that in most public joint stock companies the shareholders play no part at all. They very rarely vote, and have very little influence on the directors. I am talking of the large joint stock companies.

Mr. Lyttelton: I must say that the hon. Gentleman has the most fantastic ideas about joint stock companies, the Companies Act, and what shareholders do. It is quite true, of course, that where they are satisfied with the management of the company, they do not vote, but if I were to propose the election of certain Members of this House to my own company, I should hear very serious protests from a great many shareholders.
As I say, these taxes bear very heavily upon the small business which is trying to develop, because it takes out of its undistributed profits those sums which would go towards its expansion. Hon. Members are, of course, correct—I think the hon. Member for Wallsend was on this point—when they say that profits have risen very greatly since 1938. They declined a little from the peak in 1949, and it may be that with the American boom they are on the upgrade again. They are multiplied by about two and a half. Of course, this is really only a way of saying that the value of money has gone down. I would particularly like to remind the hon. Member for Wallsend that, although dividends and interest payments have risen by 43 per cent. since 1938, the national wage bill has gone up by 140 per cent.

Mr. McKay: There are more workers.

Mr. Lyttelton: Perhaps so, and I regard that as a highly desirable thing. The only point I am trying to make, and to make very seriously, is that the

hon. Member is in a deep fallacy when he imagines that profits, as my hon. Friend the Member for Chippenham (Mr. Eccles) was saying, and wages are two conflicting things. He has only to look—

Mr. McKay: I did not say that.

Mr. Lyttelton: Perhaps I misunderstood the hon. Gentleman, but I think that was the burden of his argument all the same. The outstanding feature of our industrial economy at the moment is the depletion of industrial capital due to the swingeing rates of tax levied, which will make, over a period, the re-equipment of British industry lag far behind what is necessary. As I have said, re-equipment is a continuous process. It must be carried on month by month, all the more so in 1950 because methods, processes and machines become much more quickly obsolete in the 1950's than they did in the 1900's.
The tax on undistributed profits is really a stupid tax because it is drying up the very sources from which increased revenue and increased wages can be drawn year by year. May I, on a much broader theme, implore hon. Members in all parts of the Committee to try and believe in a high wages, high production country. That is what we want. The longer we go on promulgating this idea that money put in plant and equipment of an industrial country comes out of the pockets of the workers, the less likely we are to get into a really prosperous condition. If the Chancellor wants to get some golden eggs he must be very careful what taxes and burdens he puts on the oviparous parts of the goose. It is beside the point on this Clause to make a calculation of the loss of revenue. Theoretically, it is £58 million or £60 million. If the Committee accepts my contention that a tax on undistributed profits is a tax on capital equipment, then the loss of revenue will be progressively made good by increased taxable profits and increased personal income which the increased productivity from reinvestment of this capital will bring in its train. That must be taken into account when looking at this kind of measure.
I have expressed the fear before, and it is present in my mind now, that it is part of Socialist policy—and I detected


it in the speeches of the hon. and learned Member for Kettering and the hon. Member for Edmonton—deliberately to reduce the availability of capital for industrial undertakings in order to create a situation in future when the Government will say that industry has not the necessary capital with which to re-equip itself.

Mr. Ellis Smith: That is nonsense.

Mr. Lyttelton: The hon. Member, who has a deep industrial knowledge, evidently disagrees, but if he reads the speeches of the hon. Member for Edmonton and the hon. and learned Member for Kettering, he will see that the burden of their song was that none of the undistributed profits should be left in the hands of the shareholders, but ought to be taken by the Government and invested in some Government scheme.

Mr. Mitchison: I did not say so.

Mr. Lyttelton: We shall see in HANSARD. This is the insidious method of getting at the doctrine, temporarily interned at Dorking, that the object of Socialism is to get at all methods of production, distribution and exchange. This tax is vicious for the reasons I have shown, and I ask the Committee to accept the new Clause.

The Minister of State for Economic Affairs (Mr. Gaitskell): We have had a quiet and interesting Debate for the main part. The subject is undoubtedly complex, and if we had been in a state of political excitement throughout, it would have been more difficult to think clearly.
The direct consequence of this new Clause is to transfer just over £60 million to companies and, therefore, to their shareholders, their proprietors. I do not think the Opposition are likely to argue—and I do not think they have argued—that this is a case where they feel that hardship is the sort of plea they should put forward. They are not asking us to deprive the Revenue of some funds in order to relieve hardship or to meet the necessities of some individuals. They are not saying that there is anything particularly meritorious in transferring from the rest of the community this fairly large sum of money to shareholders.
Their case has been based almost entirely on the production argument

They have based it on the argument that if this change were made, despite the loss to the Revenue, there would be a corresponding, or even more than a corresponding, improvement in productivity, and that therefore from the longer point of view, neither the Revenue nor the rest of the community would suffer. I think that is a fair presentation and summary of the Opposition's argument.
All of us agree on the importance of increasing productivity. There is no dispute about that. The Chancellor has certainly made a great many speeches on that subject, and so have right hon. Gentlemen on both sides of the Committee. The question is whether it is really so certain that the change here proposed would have the consequences on production which the Opposition claim. Looking at the situation today, there seems to me extremely little evidence that that would be the case. Certainly when one asks what are the factors which prevent increasing productivity today, I very seldom come across any suggestion that it is lack of finance. Obviously, I do not wish to go into detail on what are the difficulties still to be overcome in that field.

Mr. Lyttelton: It is very courteous of the right hon. Gentleman to give way, but when somebody like the hon. Member for Rotherham (Mr. Jack Jones) points to the shortage of electrical power in this country, that is really because there is a shortage of capital Power could be greatly increased if that were not so.

Mr. Gaitskell: The right hon. Gentleman could not have given a better example of the point I am trying to make. The reasons there is a shortage of electrical power are, first, that during the war we were unable to build power stations, and secondly, that since then the amount of our resources that we have been able to devote to building and equipping generating stations has necessarily been limited, not by finance, but by the fact that our physical resources are limited.
I am astonished at the right hon. Gentleman. Surely he understands that our difficulty in this field is one of restricting investment, of controlling investment and preventing it from getting out of hand and creating an inflationary situation. That is what the Government have been constantly concerned to do; and it


has been extremely difficult to handle. I thought the right hon. Gentleman understood that, and I am surprised. Is he really suggesting that the British Electricity Authority cannot build power stations and instal equipment today because they are short of finance?

Mr. Lyttelton: The British Electricity Authority cannot get on with their job now because there are insufficient savings, in the view of the Government, to reinvest over the whole programme; and they have been forbidden to carry out the programme they think is necessary. The right hon. Gentleman must not misunderstand me. When one talks about finance, one has to relate it to what it represents in materials, and so on.

Mr. Gaitskell: The right hon. Gentleman is shifting his ground. He is now saying this is not wholly because of finance but because total saving is not as large as it should be. These are different things. I will come to that and the consequences that this Clause might have on new saving.
I repeat that, so far as the present situation is concerned, it is really useless to pretend that individual companies are short of finance with which to purchase equipment. There is a long queue of people wishing to proceed with investment. There is ample finance, but physical resources are not so easy. That is quite natural in a time of full employment, when we are trying to build our export trade, to restore our trade balance and to recover from the war.
The right hon. Member for Warwick and Leamington (Mr. Eden), and I think the right hon. Member for Aldershot (Mr. Lyttelton), made considerable play of the argument that owing to the rise in cost of capital equipment, depreciation allowances were insufficient to cover the cost of the new equipment at the new prices. All I would say is that it is an extremely complicated matter. I could produce another sum, rather different from the one that the right hon. Member for Aldershot produced, showing that, with the new initial allowance granted last year, we really had met any possible complaint on that score. If I do not do it, it is because I do not want to worry the Committee. The plain fact is that, according to the assumptions one takes in this matter, one can produce a different result.
The right hon. Member for Aldershot happened to take a case where the price of equipment had risen exceptionally highly. He ignored the scrap value, as my hon. Friend the Member for Bolton, West (Mr. J. Lewis), pointed out, and he did not refer to the initial allowance which would be available in the new year as soon as the equipment was installed. I merely want to state that, as far as the Government are concerned, we believe that in that change which was made last year we have substantially met that argument, and I may tell the right hon. Member for Warwick and Leamington that we were not unimpressed by the argument of people such as Mr. Chambers, whose article was written before the change was made.
6.30 p.m.
However, at the same time I should like to say this. While nobody would dissent from the view that a high rate of company reserves was desirable, and that clearly in the circumstances of today, when admittedly we can no longer expect to rely to the same extent on savings from wealthy private individuals—that is not in dispute between us—there should be a high rate of company saving, nevertheless there are limits to this. As I think the hon. Member for Chippenham (Mr. Eccles) said, there are other arguments against concentrating savings through this channel alone. There is certainly very much less flexibility in the capital market, if indeed anything goes into the capital market, and we must certainly bear that in mind as well.
I should like to turn to the other, and I think the more important, question of the consequence of this new Clause on the rate of saving, which is quite a different thing from the rate of interest. As I have said, the immediate consequence is to transfer £60 million from the Exchequer. Other things being equal, one would say that unless that was balanced by increased taxation in other directions there would be inflationary consequences. As I understand it, the argument of the Opposition is that that will not be so in this case because all of that £60 million will, in fact, remain to reserve, as it were, as it would have been if the 10 per cent. tax had not been levied at all in the first instance. The right hon. Member for Warwick and Leamington said that the new Clause


did attempt to secure that that would be the consequence, as I understood him. All I can say is that I have read the new Clause carefully and I have sought the advice of my right hon. and learned Friend the Solicitor-General, and I cannot see that it leaves the matter there at all. On the contrary, one cannot say whether the £60 million which the Exchequer would have to give up would or would not be saved.
May I give the Committee a simple example, because it is the easiest way of putting my point? Suppose that a company has net profits of £200,000, and suppose that before the new Clause is considered the company puts £100,000 to reserve, less the 10 per cent. tax which is due on undistributed profits; that is to say, it puts to reserve £90,000 net. Suppose, then, that the other £100,000, less the £30,000 tax, is distributed to shareholders in dividends; that is to say, £70,000 is paid out in dividends. The question that arises is: supposing the £10,000 which was deducted for taxation from the £100,000 undistributed profits is given back to the company, what will they do with it?
I cannot see that there is any particularly convincing reason to suppose that they will simply raise the amount of undistributed profits to £100,000 from £90,000. Of course, they might do that, but they might have taken the view that all they needed to put to reserve was £90,000 in the first instance, and they might say "We have got this back again, and now we will distribute to the shareholders the whole of it, less the tax that we would have to pay on it." Or they might take an intermediate position. But I cannot see any argument which would lead one to suppose that the money might be saved. Some might be saved, none might be saved, but there is no reason to see why it should be saved.

Mr. Lyttelton: I thank the right hon. Gentleman for giving way. I should like him to deal with this point. This may not be the best way, as my right hon. Friend has said, but in relation to the refund of E.P.T. the Government have devised a system, with which they are apparently satisfied, by which the refund of E.P.T. cannot be distributed. Therefore, the problem is not insoluble, on the Government's own showing.

Mr. Gaitskell: All I can say is that, as far as this new Clause is concerned, it is impossible to assert that this money will be put to reserve. Indeed, other hon. Members opposite have admitted that they cannot guarantee that that will be the case, and that a certain amount of it or possibly the whole of it, less tax, might be paid out in dividends. I quite agree that the existence of a differential between tax on distributed and undistributed profits is itself an incentive to a company to put more to reserve, and I support that principle absolutely.
Of course, by raising the rate of Profits Tax on distributed profits we increased the differential last autumn, though I am sorry to say that on that occasion hon. Members opposite did not give us their support. But that is the important point—the relationship between the tax on the two—and I would say straight away that if the Opposition were saying we ought to have a look and see whether, taking the Profits Tax as a whole, we had not better adjust it in such a way as to increase the differential, I would have said that that is something worth considering. The argument, of course, would have been different and the consequence would have been different so far as the shareholders are concerned.
However, even if the Opposition's argument were sound and if in fact all of this money which is to be given back were put to reserve, there are still difficulties about it. Several of my hon. Friends have made the point—it is a perfectly valid point, and I do not think the right hon. Gentleman has answered it at all—that in taking out this money for taxation and using it for a Budget surplus we are in effect producing community saving even if we are reducing private saving. That may or may not be a good thing, but it certainly is not diminishing savings.
I should be inclined to take the view that in present circumstances, where the distribution of wealth is extremely uneven, though we have gone far to produce a much more equal distribution of income, there is not a great deal to be said for handing back to the community these funds merely to swell the investments of private individuals. It may be argued, "But you are forgetting that by taking it away for the Exchequer you are diminishing investment." I contest that very strongly. I am not going to take the line that the Government take this


money and invest it themselves. What is likely to happen is that the Government will use this surplus to repay a debt; the money physically, so to speak, will get into the hands of the banks, insurance companies, and other holders of Government bonds, and will be available for investment again in that way.
I think this is not the method to control the direction of investment. There are other ways of doing that—the Development Area Acts and so on—but what is perfectly clear is that there is no reason why investments should diminish. All that it means is that the company, instead of being able to draw on its own accumulated reserves for expansion, to that extent has to go to the market and borrow. I do not say that there is anything very wrong with that if at the same time we achieve, as we shall have achieved, a more even distribution of wealth in the community.

Mr. Bracken: But will the market be there?

Mr. Gaitskell: Certainly. It must be there, as there is a Budget surplus and funds are available. It may come from the insurance companies, it may come from the banks or it may come from the Government, but there is no reason at all to suppose that there will be any difficulty in their borrowing. I will concede one point to the hon. Member for Chippenham. I think he has a point here, and I grant it to him. If one does change the direction of savings in this way, or rather modify the direction in which they have been going—because they have been going more and more in the direction of corporate savings, or company reserves—and if one does divert them to other channels, through the Budget surplus, then there may be consequences on the supply of capital ready to take very serious risks—risk-bearing capital.
I would concede this point: I think it is desirable that we should build up institutions which are prepared to invest money in risk-bearing enterprises which find difficulty in getting the funds from other sources. That is a very general problem and it has not been mentioned here for the first time. As I think the hon. Member for Chippenham mentioned, there are some institutions in this country of that kind and we shall have to go a long way further.
That is the only point in this argument which, as far as I can see, has any validity whatever. There may be a few arguments in favour of the Clause but I must ask right hon. and hon. Gentlemen opposite to consider very seriously whether in present circumstances they do not think that a change of this kind would have most serious consequences on the wage situation. I know that the right hon. Member for Warwick and Leamington is prepared to consider this seriously. Whatever hon. Members opposite may say, those of us who have had to discuss this matter with the trade unions always come up against this argument: why do you not do something about profits?
For the moment, let us leave aside the question of how valid that argument is. We must understand that it is there and that it is something very strongly felt indeed in present circumstances. That is not surprising because, if we take the distribution of the national income between profits and wages and the way it has changed since 1938, before taxation, it is of course fairly striking. The increase in profits prior to taxation is just about three times—an increase from £568 million in 1938 to £1,730 million in 1949; whereas the increase in wages is about 2½ times—from £1,735 million in 1938 to £4,280 million in 1949.

Mr. Molson: Why should the right hon. Gentleman take the figure of profits before deduction of tax?

Mr. Gaitskell: Because we are discussing whether or not a tax is to remain, and obviously that is the relevant figure. I am bound to say, in view of all the circumstances and in view of the fact that we are still in a fairly inflationary condition, that it seems to me obvious that there would be the greatest possible danger in adopting these proposals.

Mr. Molson: Surely it would only be relevant to quote the figures for profits and wages before tax has been deducted if it were being proposed from this side of the Committee today that we should do away with all taxation altogether. We are merely referring to one particularly onerous form of taxation which, in our submission, bears upon that part of profits which is most productive.

Mr. Gaitskell: Obviously, if one were to bring in taxation one would have to


bring in taxation on wages, indirect taxation and so on. I think my argument is a perfectly valid one. Prior to taxation there has been a relatively greater increase in profits than in wages. I do not deny for a moment that profits are taxed heavily. I have been saying it repeatedly and it is most important that everybody should understand it. Nevertheless, we must appreciate the background, which is this relative increase in profits.
There is another point to which, I think, a good deal of importance must be attached. We have been trying to keep inflation in check, on the one hand by inviting the trade unions to exercise restraint in putting forward wage claims, and, on the other hand, by inviting companies to exercise restrain in the payment of dividends. On the whole, I think the Committee will agree that both sides, the unions and the companies, have played pretty fair in this matter and there has been a good deal of restrain exercised. But here is a point which frequently arises in discussions with the unions.
It is one thing, they say, to invite us, the wage earners, to forgo any increase in wages; that means that we forgo them for ever. It means that we do not get the 5s. or the 10s. or the £1 extra a week. It is different in the case of the shareholders, who are being asked to forgo an increase in dividends. All you are saying to them, in fact, is, "Please do not consume it now, you will get it later." I am afraid that is inescapably the fact because we are not saying to them, "Please forgo your profits." We are saying to them, "Please forgo your dividends." It is precisely because the tax imposed on profits corrects this position that we regard it as having considerable value in this connection.

6.45 p.m.

Mr. Eccles: I think this is an interesting point. Does the Minister maintain that the improvement in the assets due to the investment of profits ploughed back into the industry is not also of benefit to those who are employed in the business? I think the benefit is shared. Of course, it is a total loss to the worker who does not get a rise in his wages, but it is not a total gain to the shareholder if the profit is ploughed back. Part of the gain goes, of course, to the shareholder but part to the worker, if it is well done.

Mr. Gaitskell: Nobody would deny that if one looks at the matter in a very broad way then, of course, the additional investment which eventually takes place raises productivity and no doubt benefits the community as a whole, but the plain comparison remains—the comparison between the man who is asked to give up his extra 5s. a week and who is simply deprived of that money and the shareholder who is asked to give up maybe only a few pounds a year or maybe a few hundred pounds a year. That few pounds a year or that few hundred pounds a year is simply chalked up to his capital, so to speak, and, of course, in due course there is an appreciation in the value of his shares of which he has the benefit. I do not think that can be denied.
I do not want to make too much of it but this is really a difficult point which we meet in the arguments we have with our trade union friends. Any attempt in the present circumstances to reduce the taxation on profits, even on undistributed profits, is in my view certain to have the gravest consequences. I say, therefore, that this new Clause—

Mr. Eden: This is a very important question. Will the right hon. Gentleman tell me how he explains the Swedish trade union attitude which I put to him earlier this afternoon, where it seemed possible not only to explain the situation to these people but for themselves to ask for this particular fiscal measure in order that there might be greater efficiency in the years which lie ahead? Why is it so much more difficult for us to explain this matter than apparently it has been for the trade unions to explain the matter in Sweden?

Mr. Gaitskell: Obviously, without notice, and without investigating the precise position in Sweden, I could not answer that question. There may be all sorts of possibilities. Wages may have gone up, it may be part of a deal by which wages went up at the same time. Further, the exact terms of the proposal would, of course, be of immense importance.
Whatever may be the position in Sweden, however, in this country this proposal is likely in present circumstances to produce very serious consequences in two ways. On the one side, it will lead to some extent to increased dividends and increased


expenditure by shareholders and, on the other hand, it will also lead almost certainly, I am afraid, if it is passed, to increased demands for wages which it would be extremely difficult to resist. This double influence would have very serious consequences to our country in the present circumstances. It would have very serious consequences to our prospects of not merely achieving—because we have really got past that stage—but of maintaining our balance of payments, of solving our dollar problem and of

avoiding the danger of inflation which undoubtedly still threatens us. I must, therefore, ask the Committee to reject the Clause.

Mr. R. J. Taylor (Lord Commissioner of the Treasury): rose in his place, and claimed to move, "That the Question be now put."

Question put. "That the Question be now put."

The Committee divided: Ayes, 296; Noes, 283.

Division No. 39.]
AYES
[6.49 p.m.


Acland, Sir Richard
Davies, S. O. (Merthyr)
Hughes, Emrys (S. Ayr)


Adams, Richard
de Freitas, Geoffrey
Hughes, Hector (Aberdeen, N.)


Albu, A. H.
Deer, G.
Hughes, Moelwyn (Islington, N.)


Allen, A. C. (Bosworth)
Delargy, H. J.
Hynd, H. (Accrington)


Anderson, F. (Whitehaven)
Dodds, N. N.
Hynd, J. B. (Attercliffe)


Attlee, Rt. Hon. C. R.
Donnelly, D.
Irvine, A. J. (Edge Hill)


Awbery, S. S.
Driberg, T. E. N.
Irving, W. J. (Wood Green)


Ayles, W. H.
Dugdale, Rt. Hon. J. (W. Bromwich)
Isaacs, Rt. Hon. G. A.


Bacon, Miss A.
Dye, S.
Janner, B.


Baird, J.
Ede, Rt. Hon. J. C.
Jay, D. P. T.


Balfour, A.
Edelman, M.
Jeger, G. (Goole)


Barnes, Rt. Hon. A. J.
Edwards, John (Brighouse)
Jeger, Dr. S. W (St. Pancras, S.)


Bartley, P.
Edwards, Rt. Hon. N. (Caerphilly)
Jenkins, R. H.


Bellenger, Rt. Hon. F. J.
Edwards, W. J. (Stepney)
Johnson, Jemes (Rugby)


Benson, G.
Evans, Albert (Islington, S. W.)
Johnston, Douglas (Paisley)


Beswick, F.
Evans, E. (Lowestoft)
Jones, D. T. (Hartlepool)


Bevan, Rt. Hon. A. (Ebbw Vale)
Evans, S. N. (Wednesbury)
Jones, Frederick Elwyn (West Ham, S.)


Bing, G. H. C.
Ewart, R.
Jones, Jack (Rotherham)


Blackburn, A. R.
Fernyhough, E.
Jones, William Elwyn (Conway)


Blenkinsop, A.
Field, Capt. W. J.
Keenan, W.


Boardman, H.
Finch, H. J.
Kenyon, C.


Booth, A.
Fletcher, E. G. M. (Islington, E.)
Key, Rt. Hon. C. W.


Bottomley, A. G.
Follick, M.
King, H. M.


Bowden, H. W.
Forman, J. C.
Kinley, J.


Bowles, F. G. (Nuneaton)
Fraser, T. (Hamilton)
Kirkwood, Rt. Hon. D.


Braddock, Mrs. E. M.
Freeman, J. (Watford)
Lang, Rev. G.


Brockway, A. Fenner
Freeman, Peter (Newport)
Lee, F. (Newton)


Brook, D. (Halifax)
Gaitskell, Rt. Hon. H T N
Lee, Mist J. (Cannock)


Brooks, T. J. (Normanton)
Ganley, Mrs. C. S.
Lever, L. M. (Ardwick)


Broughton, Dr. A. D. D.
Gibson, C. W.
Lever, N. H. (Cheetham)


Brown, George (Belper)
Gilzean, A.
Lewis, A. W. J. (West Ham, N.)


Brown, T. J. (Ince)
Glanville, J. E. (Consett)
Lewis, J. (Bolton, W.)


Burke, W. A.
Gooch, E. G.
Lindgren, G. S.


Burton, Miss E.
Gordon, Walker, Rt. Hon. P. C.
Lipton, Lt.-Col. M


Butler, H. W. (Hackney, S.)
Greenwood, A. W. J. (Rossendale)
Logan, D. G


Callaghan, James
Greenwood, Rt. Hn. Arthur (Wakefield)
Longden, F. (Small Heath)


Carmichael, James
Grenfell, D. R.
McAllister, G.


Castle, Mrs. B. A.
Grey, C. F.
MacColl, J. E.


Champion, A. J.
Griffiths, D. (Rother Valley)
McGhee, H. G


Chetwynd, G. R.
Griffiths, Rt. Hon. J. (Llanelly)
McInnes, J.


Clunie, J.
Griffiths, W. D. (Exchange)
Mack, J. D.


Cocks, F. S.
Gunter, R. J.
McKay, J. (Wallsend)


Coldrick, W.
Hale, J. (Rochdale)
Mackay, R W. G. (Reading, N.)


Collick, P.
Hale, Leslie (Oldham. W.)
McLeavy, F.


Collindridge, F.
Hall, J. (Gateshead, W.)
MacMillan, M. K. (Western Isles)


Cook, T. F.
Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
McNeil, Rt. Hon. H.


Cooper, G (Middlesbrough, W.)
Hamilton, W. W.
MacPherson, Malcolm (Stirling)


Cooper, J. (Deptford)
Hardman, D. R.
Mainwaring, W. H.


Corbet, Mrs. F. K. (Peckham)
Hardy, E. A.
Mallalieu, E. L. (Brigg)


Cove, W. G.
Hargreaves, A.
Mallalieu, J. P. W. (Huddersfield, E.)


Craddock, George (Bradford, S.)
Harrison, J.
Mann, Mrs. J.


Crawley, A.
Hastings, Dr. Somervilie
Manuel, A. C.


Cripps, Rt. Hon. Sir S.
Hayman, F. H.
Marquand, Rt. Hon. H A


Crosland, C. A. R.
Henderson, Rt. Hon. A. (Rowley Regis)
Mathers, Rt. Hon. George


Crossman, R. H. S
Herbison, Miss M.
Hellish, R. J.


Cullen, Mrs. A.
Hewitson, Capt. M.
Messer, F.


Daggar, G.
Hobson, C. R.
Middleton, Mrs. L


Daines, P.
Holman, P.
Mikardo, Ian


Darling, G. (Hillsboro')
Holmes, H. E (Hemsworth)
Mitchison, G. R.


Davies, A. Edward (Stoke, N.)
Houghton, Douglas
Moeran, E. W


Davies, Ernest (Enfield, E.)
Hoy, J.
Monslow, W.


Davies, Harold (Leek)
Hubbard, T.
Moody, A. S


Davies, R. J. (Westhoughton)
Hudson, J. H. (Ealing, N.)
Morgan, Dr. H. B.




Morley, R.
Roberts, Goronwy (Caernarvonshire)
Turner-Samuels, M


Morris, P. (Swansea, W.)
Robertson, J. J. (Berwick)
Usborne, Henry


Morrison, Rt. Hon. H. (Lewisham, S.)
Robinson, Kenneth (St. Pancras, N.)
Vernon, Maj. W. F.


Mort, D. L.
Rogers, G. H. R. (Kensington, N.)
Viant, S. P.


Moyle, A.
Ross, William (Kilmarnock)
Wallace, H. W.


Mulley, F. W.
Royle, C.
Watkins, T. E.


Murray, J. D
Shackleton, E. A. A.
Webb, Rt. Hon. M. (Bradford. C.)


Nally, W.
Shawcross, Rt. Hon. Sir H.
Weitzman, D.


Neal, H.
Shinwell, Rt. Hon. E.
Wells, P L. (Faversham)


Noel-Baker, Rt. Hon. P. J
Shurmer, P. L. E.
Wells, W. T. (Walsall)


Oldfield, W. H.
Silverman, J. (Erdington)
West, D. G.


Oliver, G. H
Silverman, S. S. (Nelson)
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Orbach, M.
Simmons, C. J.
White, Mrs. E. (E. Flint)


Padley, W. E.
Slater, J
White, H. (Derbyshire, N. E.)


Paling, Rt. Hon. Wilfred (Dearne V'lly)
Smith, Ellis (Stoke, S.)
Whiteley, Rt. Hon. W.


Paling, Will T. (Dewsbury)
Snow, J. W.
Wigg, George


Pannell, T. C.
Sorensen, R. W.
Wilcock, Group-Capt. C. A. B


Pargiter, G. A.
Soskice, Rt. Hon. Sir F.
Wilkes, L.


Parker, J.
Sparks, J. A.
Willey, F. T (Sunderland)


Paton, J.
Steele, T.
Willey, O. G. (Cleveland)


Pearson, A
Stewart, Michael (Fulham, E.)
Williams, D. J. (Neath)


Peart, T. F.
Strachey, Rt. Hon. J.
Williams, Ronald (Wigan)


Poole, Cecil
Strauss, Rt. Hon. G. R. (Vauxhall)
Williams, Rt. Hon. T. (Don Valley)


Popplewell, E
Stross, Dr. B.
Williams, W. T. (Hammersmith, S.)


Porter, G.
Summerskill, Rt. Hon. Edith
Wilson, Rt. Hon. J. H. (Huyton)


Price, M. Philips (Gloucestershire, W.)
Sylvester, G. O.
Winterbottom, I. (Nottingham, C.)


Proctor, W. T.
Taylor, H. B. (Mansfield)
Winterbottom, R. E. (Brightside)


Pryde, D. J.
Taylor, R. J. (Morpeth)
Wise, Major F. J.


Pursey, Comdr. H
Thomas, D. E. (Abordare)
Woodburn, Rt. Hon. A.


Rankin, J.
Thomas, George (Cardiff)
Woods, Rev. G. S.


Rees, Mrs. D
Thomas, I. O. (Wrekin)
Wyatt, W L.


Reeves, J
Thomas, I R. (Rhondda, W.)
Yates, V. F.


Reid, T. (Swindon)
Thorneycroft, Harry (Clayton)
Younger, Hon. Kenneth


Reid, W. (Camlachie)
Thurtle, Ernest



Rhodes, H.
Timmons, J.
TELLERS FOR THE AYES:


Richards, R
Tomlinson, Rt. Hon. G.
Mr. Hannan and Mr. Wilkins.


Robens, A
Tomney, F.





NOES


Aitken, W. T.
Conant, Maj. R. J. E.
George, Lady M. Lloyd


Alport, C. J. M.
Cooper, A. E. (Ilford, S.)
Glyn, Sir R.


Amery, J. (Preston, N.)
Cooper-Key, E. M.
Gomme-Duncan, Col. A.


Amory, D. Heathcoat (Tiverton)
Corbett, Lieut.-Col. U. (Ludlow)
Granville, E. (Eye)


Arbuthnot, John
Craddock, G. B. (Spelthorne)
Gridley, Sir A.


Ashton, H. (Chelmsford)
Cranborne, Viscount
Grimond, J.


Assheton, Rt. Hon. R. (Blackburn, W)
Cross, Rt. Hon. Sir R.
Grimston, Hon. J. (St. Albans)


Astor, Hon. M
Crosthwaite-Eyre, Col. O. E
Grimston, R. V. (Westbury)


Baker, P.
Crouch, R. F.
Harden, J. R. E.


Baldock, J M
Crowder, F. P. (Rulslip-Northwood)
Hare, Hon J. H. (Woodbridge)


Baldwin, A E.
Crowder, Capt. John F. E. (Finchley)
Harris, F. W. (Croydon, N.)


Banks, Col. C.
Cundiff, F. W.
Harris, R. R. (Heston)


Baxter, A. B.
Cuthbert, W. N.
Harvey, Air-Codre. A. V. (Macclesfield)


Beamish, Maj. T. V. H.
Darling, Sir W. Y. (Edinburgh, S.)
Harvey, I. (Harrow, E.)


Bell, R. M.
Davidson, Viscountess
Hay, John


Bennett, Sir P. (Edgbaston)
Davies, Rt. Hn. Clement (Montgomery)
Head, Brig. A. H.


Bennett, R. F. B. (Gosport)
Davies, Nigel (Epping)
Heald, L. F.


Bennett, W. G. (Woodside)
de Chair, S.
Heath, Col. E. R.


Bevins, J. R. (Liverpool, Toxteth)
De la Bère, R.
Henderson, John (Cathcart)


Birch, Nigel
Deedes, W. F.
Hicks-Beach, Maj. W. W.


Bishop, F. P.
Digby, S. Wingfield
Higgs, J. M. C.


Black, C. W.
Dodds-Parker, A. D.
Hill, Mrs. E. (Wythenshawe)


Boles, Lt.-Col. D. C. (Wells)
Donner, P. W.
Hill, Dr. C. (Luton)


Boothby, R.
Douglas-Hamilton Lord M.
Hinchingbrooke, Viscount


Bossom, A. C.
Drayson, G. B
Hirst, Geoffrey


Bowen, R.
Drewe, C.
Hogg, Hon. Q.


Bower, N
Dugdale, Mai. Sir T. (Richmond)
Hollis, M. C.


Boyd-Carpenter, J. A.
Duncan, Capt. J. A. L.
Holmes, Sir J. Stanley (Harwich)


Bracken, Rt. Hon. Brendan
Dunglass, Lord
Hope, Lord J.


Braine, B.
Duthie, W. S.
Hopkinson H. L. D'A.


Braithwaite, Lt.-Comdr. J. G
Eccles, D. M.
Hornsby-Smith, Miss P.


Brooke, H. (Hampstead)
Eden, Rt. Hon. A.
Horsbrugh, Miss F.


Browne, J. N. (Govan)
Elliot, Lieut.-Col. Rt. Hon. Walter
Howard, G. R. (St. Ives)


Buchan-Hepburn, P. G. T
Erroll, F. J.
Howard, S. G, (Cambridgeshire)


Bullock, Capt. M.
Fisher, Nigel
Hudson, Sir Austin (Lewisham, N.)


Bullus, Wing-Commander E. E.
Fletcher, W. (Bury)
Hudson, Rt. Hon. R. S. (Southport)


Burden, Squadron-Leader F. A.
Fort, R.
Hudson, W. R. A. (Hull, N.)


Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
Foster, J. G.
Hulbert, Wing-Cdr. N. J.


Carr, L. R. (Mitcham)
Fraser, Hon. H. C. P. (Stone)
Hurd, A. R.


Carson, Hon. E.
Fraser, Sir I. (Lonsdale)
Hutchinson, Geoffrey (Ilford, N.)


Channon, H.
Galbraith, Cmdr. T. D (Pollok)
Hutchison, Lt.-Com. Clark (E'b'rgh W.)


Clarke, Col. R. S. (East Grinstead)
Galbraith, T. G. D. (Hillhead)
Hyde, H. M.


Clarke, Brig. T. H. (Portsmouth, W.)
Gammans, L. D.
Hylton-Foster, H. B.


Clyde, J. L.
Garner-Evans, E. H. (Denbigh)
Jeffreys, General Sir G.



Gates, Maj. E. E.
Johnson, Howard S. (Kemptown)







Jones, A. (Hall Green)
Nabarro, G.
Spence, H. R. (Aberdeenshire, W.)


Joynson-Hicks, Hon. L. W.
Nicholls, H.
Spens, Sir P (Kensington, S.)


Kaberry, D.
Nicholson, G.
Stanley, Capt. Hon. R. (N. Fylde)


Keeling, E. H.
Nield, B. (Chester)
Stevens, G. P.


Kerr, H W. (Cambridge)
Noble, Comdr. A. H. P.
Steward, W. A. (Woolwich, W.)


Lambert, Hon. G.
Nugent, G. R. H.
Stoddart-Scott, Col. M


Lancaster, Col. C. G.
Nutting, Anthony
Storey, S.


Langford-Holt, J.
Oakshott, H. D.
Strauss, Henry (Norwich, S.)


Law, Rt. Hon. R. K.
Odey, G. W.
Stuart, Rt. Hon. J. (Moray)


Leather, E H. C.
O'Neill, Rt. Hon. Sir H.
Studholme, H. G.


Legge-Bourke, Maj. E. A. H.
Ormsby-Gore, Hon. W. D.
Summers, G. S.


Lindsay, Martin
Orr, Capt. L. P. S.
Sutcliffe, H.


Linstead, H. N
Orr-Ewing, Charles Ian (Hendon, N.)
Taylor, C. S. (Eastbourne)


Llewellyn, D.
Orr-Ewing, Ian L. (Weston-super-Mare)
Taylor, W. J. (Bradford, N.)


Lloyd, Rt. Hon. G. (King's Norton)
Osborne, C.
Teeling, William


Lloyd, Maj Guy (Renfrew, E.)
Perkins, W. R. D.
Thomas, J. P. L. (Hereford)


Lloyd, Selwyn (Wirral)
Peto, Brig. C. H. M.
Thompson, K. P. (Walton)


Lockwood, Lt.-Col. J. C.
Pickthorn, K
Thompson, R. H. M. (Croydon, W.)


Longden, G. J. M. (Herts, S. W.)
Pitman, I. J.
Thorneycroft, G E. P. (Monmouth)


Low, A R. W.
Powell, J. Enoch
Thornton-Kemsley, C. N.


Lucas, Major Sir J. (Portsmouth, S.)
Prescott, Stanley
Tilney, John


Lucas, P. B. (Brentford)
Price, H A. (Lewisham, W.)
Touche, G. C.


Lucas-Tooth, Sir H.
Prior-Palmer, Brig. O.
Turton, R. H


Lyttelton, Rt. Hon. O.
Profumo, J. D.
Tweedsmuir, Lady


McCallum, Maj. D.
Raikes, H. V.
Vane, W. M. F.


McCorquodale, Rt. Hon. M. S.
Rayner, Brig. R.
Vaughan-Morgan, J. K.


Macdonald, A. J. F. (Roxburgh)
Redmayne, M.
Vosper, D. F.


Mackeson, Brig. H. R.
Remnant, Hon. P.
Wade, D. W.


McKibbin, A.
Renton, D L. M.
Wakefield, E. B. (Derbyshire, W.)


McKie, J H. (Galloway)
Roberts, Emrys (Merioneth)
Wakefield, Sir W. W. (St. Marylebone)


Maclay, Hon. J. S.
Roberts, P. G. (Heeley)
Walker-Smith, D. C.


Maclean, F. H R.
Robertson, Sir D. (Caithness)
Ward, Hon. G R. (Worcester)


MacLeod, Iain (Enfield, W.)
Robinson, J. Roland (Blackpool, S.)
Ward, Miss I. (Tynemouth)


MacLeod, John (Ross and Cromarty)
Robson-Brown, W. (Esher)
Waterhouse, Capt. C.


Macpherson, N. (Dumfries)
Rodgers, John (Sevenoaks)
Watkinson, H.


Maitland, Comdr. J. W
Roper, Sir H.
Watt, Sir G. S. Harvie


Manningham-Buller, R. E
Ropner, Col. L.
Webbe, Sir H (London)


Marlowe, A. A. H
Ross, Sir R. D. (Londonderry)
White, J. Baker (Canterbury)


Marples, A. E
Russell, R. S.
Williams, C. (Torquay)


Marshall, D (Bodmin)
Ryder, Capt. R. E. D
Williams, Gerald (Tonbridge)


Marshall, S. H. (Sutton)
Savory, Prof. D. L.
Williams, Sir H. G. (Croydon, E.)


Maude, A. E. U. (Ealing, S.)
Scott, Donald
Wills, G.


Maude, J C. (Exeter)
Shepherd, W. S. (Cheadle)
Wilson, Geoffrey (Truro)


Maudling, R
Smiles, Lt.-Col. Sir W.
Winterton, Rt. Hon. Earl


Mellor, Sir J
Smith, E. Martin (Grantham)
Wood, Hon. R


Molson, A. H. E.
Smithers, Peter H. B. (Winchester)
York, C.


Moore, Lt.-Col Sir T.
Smithers, Sir W. (Orpington)
Young, Sir A. S. L.


Morris, R Hopkin (Carmarthen)
Smyth, Brig J. G. (Norwood)



Morrison, Maj. J. G. (Salisbury)
Snadden, W. McN.
TELLERS FOR THE NOES:


Morrison, Rt. Hon. W. S (Cirencester)
Soames, Capt. C.
Lieut.-Colonel Bromley-Davenport


Mott-Radclyffe, C. E.
Spearman, A. C. M.
and Major Wheatley.

Question put accordingly, "That the Clause be read a Second time."

The Committee divided: Ayes, 284; Noes, 295.

Division No. 40.]
AYES
[7.2 p.m.


Aitken, W. T.
Bowen, R.
Cross, Rt. Hon. Sir R.


Alport, C. J. M.
Bower, N.
Crosthwaite-Eyre, Col. O E


Amery, J (Preston, N.)
Boyd-Carpenter, J. A.
Crouch, R. F.


Amory, D Heathcoat (Tiverton)
Bracken, Rt. Hon. Brendan
Crowder, F. P. (Ruislip-Northwood)


Arbuthnot, John
Braine, B.
Crowder, Capt. John F. E. (Finchley)


Ashton, H. (Chelmsford)
Braithwaite, Lt-Comdr. J. G
Cundiff, F. W.


Assheton, Rt. Hon. R. (Blackburn, W.)
Brooke, H (Hampstead)
Cuthbert, W. N.


Astor, Hon. M
Browne, J. N. (Govan)
Darling, Sir W. Y. (Edinburgh, S.)


Baker, P
Buchan-Hepburn, P. G. T.
Davidson, Viscountess


Baldock, J. M.
Bullock, Capt. M.
Davies, Rt. Hn. Clement (Montgomery)


Baldwin, A E.
Bullus, Wing-Commander E. E.
Davies, Nigel (Epping)


Banks, Col. C
Burden, Squadron-Leader F. A.
de Chair, S.


Baxter, A. B.
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
De la Bère R.


Beamish, Maj. T. V. H.
Carr, L. R. (Mitcham)
Deedes, W. F.


Bell, R. M.
Carson, Hon. E.
Digby, S. Wingfield


Bennett, Sir P. (Edgbaston)
Channon, H
Dodds-Parker, A D


Bennett, R. F. B. (Gosport)
Clarke, Col. R. S. (East Grinstead)
Donner, P W


Bennett, W. G. (Woodside)
Clarke, Brig. T. H. (Portsmouth, W.)
Douglas-Hamilton, Lord M


Bevins, J R. (Liverpool, Toxteth)
Clyde, J. L.
Drayson, G. B.


Birch, Nigel
Conant, Maj. R. J. E.
Drewe, C.


Bishop, F. P
Cooper, A. E. (Ilford, S.)
Dugdale, Maj. Sir T. (Richmond)


Black, C. W.
Cooper-Key, E. M.
Duncan, Capt. J. A. L.


Boles, Lt.-Col. D. C. (Wells)
Corbett, Lieut.-Col. U. (Ludlow)
Dunglass, Lord


Boothby, R.
Craddock, G. B. (Spelthorne)
Duthie, W. S.


Bossom, A. C.
Cranborne, Viscount
Eccles, D. M.




Eden, Rt. Hon. A.
Llewellyn, D.
Robinson, J. Roland (Blackpool, S.)


Elliot, Lieut.-Col. Rt. Hon. Walter
Lloyd, Rt. Hon. G. (King's Norton)
Robson-Brown, W. (Esher)


Erroll, F. J.
Lloyd, Maj. Guy (Renfrew, E.)
Rodgers, John (Sevenoaks)


Fisher, Nigel
Lloyd, Selwyn (Wirral)
Roper, Sir H.


Fletcher, W. (Bury)
Lockwood, Lt.-Col, J. C.
Ropner, Col. L.


Fort, R.
Longden, G. J. M. (Herts, S. W.)
Ross, Sir R. D. (Londonderry)


Foster, J. G.
Low, A. R. W.
Russell, R. S.


Fraser, Hon. H. C. P. (Stone)
Lucas, Major Sir J. (Portsmouth, S.)
Ryder, Capt. R. E. D.


Fraser, Sir I. (Lonsdale)
Lucas, P. B. (Brentford)
Savory, Prof. D. L.


Galbraith, Cmdr. T. D. (Pollok)
Lucas-Tooth, Sir H.
Scott, Donald


Gammans, L. D.
Lyttelton, Rt. Hon. O.
Shepherd, W. S. (Cheadle)


Garner-Evans, E. H. (Denbigh)
McCallum, Maj. D.
Smiles, Lt.-Col. Sir W.


Gates, Maj. E. E.
McCorquodale, Rt. Hon. M. S
Smith, E. Martin (Grantham)


George, Lady M. Lloyd
Macdonald, A. J. F. (Roxburgh)
Smithers, Peter H. B. (Winchester)


Glyn, Sir R.
Macdonald, Sir P. (I. of Wight)
Smithers, Sir W. (Orpington)


Gomme-Duncan, Col. A.
Mackeson, Brig, H. R.
Smyth, Brig. J. G. (Norwood)


Gridley, Sir A.
McKibbin, A.
Snadden, W. McN.


Grimond, J.
McKie, J. H. (Galloway)
Soames, Capt. C.


Grimston, Hon. J. (St. Albans)
Maclay, Hon. J. S.
Spearman, A. C. M.


Grimston, R. V. (Westbury)
Maclean, F. H. R.
Spence, H. R. (Aberdeenshire, W.)


Harden, J. R. E.
MacLeod, Iain (Enfield, W.)
Spens, Sir P. (Kensington, S.)


Hare, Hon. J. H. (Woodbridge)
MacLeod, John (Ross and Cromarty)
Stanley, Capt. Hon. R. (N. Fylde)


Harris, F W. (Croydon, N.)
Macpherson, N. (Dumfries)
Stevens, G. P.


Harris, R. R. (Heston)
Maitland, Comdr. J. W.
Steward, W. A. (Woolwich, W.)


Harvey, Air-Codre. A. V. (Macclesfield)
Manningham-Buller, R. E
Stoddart-Scott, Col. M.


Harvey, I. (Harrow, E.)
Marlowe, A. A. H.
Storey, S.


Hay, John
Marples, A. E.
Strauss, Henry (Norwich, S.)


Head, Brig. A. H.
Marshall, D. (Bodmin)
Stuart, Rt. Hon. J. (Moray)


Heald, L. F.
Marshall, S. H. (Sutton)
Studholme, H. G


Heath, Col. E. R.
Maude, A. E. U. (Ealing, S.)
Summers, G. S.


Henderson, John (Cathcart)
Maude, J. C. (Exeter)
Sutcliffe, H.


Hicks-Beach, Maj. W. W.
Maudling, R.
Taylor, C. S. (Eastbourne)


Higgs, J. M. C.
Mellor, Sir J.
Taylor, W. J. (Bradford, N.)


Hill, Mrs. E. (Wythenshawe)
Molson, A. H. E.
Teeling, William


Hill, Dr. C. (Luton)
Moore, Lt.-Col. Sir T.
Thomas, J. P. L. (Hereford)


Hinchingbrooke, Viscount
Morris, R. Hopkin (Carmarthen)
Thompson, K. P. (Walton)


Hirst, Geoffrey
Morrison, Maj. J. G. (Salisbury)
Thompson, R. H. M, (Croydon, W.)


Hogg, Hon. Q
Morrison, Rt. Hon. W. S. (Cirencester)
Thorneycroft, G E. P. (Monmouth)


Hollis, M. C.
Mott-Radclyffe, C. E.
Thornton-Kemsley, C. N


Holmes, Sir J. Stanley (Harwich)
Nabarro, G.
Tilney, John


Hope, Lord J.
Nicholls, H.
Touche, G. C.


Hopkinson, H. L. D'A.
Nicholson, G
Turton, R. H.


Hornsby-Smith, Miss P.
Nield, B. (Chester)
Tweedsmuir, Lady


Horsbrugh, Miss F.
Noble, Comdr. A. H. P.
Vane, W. M. F


Howard, G. R. (St. Ives)
Nugent, G. R. H.
Vaughan-Morgan, J. K.


Howard, S. G. (Cambridgeshire)
Nutting, Anthony
Vosper, D. F.


Hudson, Sir Austin (Lewisham, N.)
Oakshott, H. D.
Wade, D. W.


Hudson, Rt. Hon. R. S. (Southport)
Odey, G. W.
Wakefield, E. B. (Derbyshire, W.)


Hudson, W. R. A. (Hull, N.)
O'Neill, Rt. Hon. Sir H.
Wakefield, Sir W. W. (St. Marylebone)


Hulbort, Wing-Cdr. N. J.
Ormsby-Gore, Hon. W. D.
Walker-Smith, D. C.


Hurd, A. R.
Orr, Capt. L. P. S.
Ward, Hon. G. R. (Worcester)


Hutchinson, Geoffrey (Ilford, N.)
Orr-Ewing, Ian L. (Weston-super-Mare)
Ward, Miss I. (Tynemouth)


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Osborne, C.
Waterhouse, Capt. C.


Hyde, H. M.
Perkins, W. R. D.
Watkinson, H.


Hylton-Foster, H. B.
Peto, Brig. C. H. M.
Watt, Sir G. S. Harvie


Jeffreys, General Sir G.
Pickthorn, K.
Webbe, Sir H. (London)


Johnson, Howard S. (Kemptown)
Pitman, I. J.
Wheatley, Major M. J. (Poole)


Jones, A. (Hall Green)
Powell, J. Enoch
White, J. Baker (Canterbury)


Joynson-Hicks, Hon. L. W.
Prescott, Stanley
Williams, C. (Torquay)


Kaberry, D.
Price, H. A. (Lewisham, W.)
Williams, Gerald (Tonbridge)


Keeling, E. H.
Prior-Palmer, Brig. O.
Williams, Sir H. G. (Croydon, E.)


Kerr, H. W. (Cambridge)
Profumo, J. D.
Wills, G.


Lambert, Hon. G.
Raikes, H. V.
Wilson, Geoffrey (Truro)


Lancaster, Col. C. G.
Rayner, Brig. R.
Winterton, Rt. Hon. Earl


Langford-Holt, J.
Redmayne, M.
Wood, Hon. R.


Law, Rt. Hon. R. K.
Remnant, Hon. P.
York, C.


Leather, E. H. C.
Renton, D. L. M
Young, Sir A S. L.


Legge-Bourke, Maj. E. A. H
Roberts, Emrys (Merioneth)



Lindsay, Martin
Roberts, P. G. (Heeley)
TELLERS FOR THE AYES:


Linstead, H. N
Robertson, Sir D. (Caithness)
Lieut.-Colonel Bromley-Davenport and




Mr. T. D. G. Galbraith.




NOES


Acland, Sir Richard
Barnes, Rt. Hon. A. J.
Bottomley, A. G.


Adams, Richard
Bartley, P.
Bowden, H. W.


Albu, A. H.
Bellenger, Rt. Hon. F. J.
Bowles, F. G. (Nuneaton)


Allen, A. C. (Bosworth)
Benson, G.
Braddock, Mrs. E. M.


Anderson, F. (Whitehaven)
Beswick, F.
Brockway, A. Fenner


Attlee, Rt. Hon. C. R.
Bevan, Rt. Hon. A. (Ebbw Vale)
Brook, D. (Halifax)


Awbery, S. S.
Bing, G. H. C.
Brooks, T. J. (Normanton)


Ayles, W. H.
Blackburn, A. R.
Broughton, Dr. A. D. D.


Bacon, Miss A.
Blenkinsop, A.
Brown, George (Belper)


Baird, J.
Boardman, H.
Brown, T. J. (Ince)


Balfour, A.
Booth, A.
Burke, W. A.







Burton, Miss E.
Hewitson, Capt. M.
Paling, Rt. Hon. Wilfred (Dearne V'lly)


Butler, H. W. (Hackney, S.)
Hobson, C. R
Paling, Will T. (Dewsbury)


Callaghan, James
Holman, P.
Pannell, T. C.


Carmichael, James
Holmes, H. E. (Hemsworth)
Pargiter, G A


Castle, Mrs. B. A
Houghton, Douglas
Parker, J


Champion, A. J.
Hoy, J.
Paton, J.


Chetwynd, G. R
Hubbard, T
Pearson, A


Clunie, J.
Hudson, J. H. (Ealing, N.)
Peart, T. F.


Cocks, F. S.
Hughes, Emrys (S. Ayr)
Poole, Cecil


Coldrick, W.
Hughes, Hector (Aberdeen, N.)
Popplewell, E


Collick, P
Hughes, Moelwyn (Islington, N.)
Porter, G.


Collindridge, F.
Hynd, H. (Accrington)
Price, M. Philips (Gloucestershire, W.)


Cook, T. F.
Hynd, J B. (Attercliffe)
Proctor, W. T.


Cooper, G (Middlesbrough, W.)
Irvine, A J. (Edge Hill)
Pryde, D. J.


Cooper, J. (Deptford)
Irving, W. J. (Wood Green)
Pursey, Comdr. H.


Corbet, Mrs. F. K. (Peckham)
Isaacs, Rt. Hon. G. A.
Rankin, J


Cove, W. G.
Janner, B
Rees, Mrs. D


Craddock, George (Bradford, S.)
Jay, D. P. T
Reeves, J


Crawley, A.
Jeger, G. (Goole)
Reid, T (Swindon)


Cripps, Rt. Hon. Sir S.
Jeger, Dr. S. W. (St. Pancras, S.)
Reid, W. (Camlachie)


Crosland, C. A. R
Jenkins, R. H.
Rhodes, H


Crossman, R. H. S
Johnson, James (Rugby)
Richards, R


Cullen, Mrs. A.
Johnston, Douglas (Paisley)
Robens, A


Daggar, G.
Jones, D. T. (Hartlepool)
Roberts, Goronwy (Caernarvonshire)


Daines, P.
Jones, Frederick Elwyn (West Ham, S.)
Robertson, J J (Berwick)


Darling, G. (Hillsboro')
Janes, Jack (Rotherham)
Robinson, Kenneth (St. Pancras, N.)


Davies, A. Edward (Stoke, N.)
Jones, William Elwyn (Conway)
Rogers, G. H. R. (Kensington, N.)


Davies, Ernest (Enfield, E.)
Keenan, W
Ross, William (Kilmarnock)


Davies, Harold (Leek)
Kenyon, C.
Royle, C


Davies, R. J. (Westhoughton)
Key, Rt. Hon. C. W
Shackleton, E. A. A.


Davies, S. O. (Merthyr)
King, H. M.
Shawcross, Rt. Hon. Sir H


de Freitas, Geoffrey
Kinley, J.
Shinwell, Rt. Hon. E.


Deer, G.
Kirkwood, Rt. Hon. D.
Shurmer, P. L. E.


De argy H. J.
Lang, Rev. G.
Silverman, J. (Erdington)


Dodds, N. N.
Lee, F. (Newton)
Silverman, S S. (Nelson)


Donnelly, D.
Lee, Mitt J. (Cannock)
Simmons, C J


Driberg, T. E. N
Lever, L M. (Ardwick)
Slater, J.


Dugdale, Rt. Hon. J. (W. Bromwich)
Lever, N. H. (Cheetham)
Smith, Ellis (Stoke, S.)


Dye, S.
Lewit, A. W. J. (West Ham, N.)
Snow, J. W.


Ede, Rt. Hon. J. C.
Lewis, J. (Bolton, W.)
Sorensen, R. W


Edelman, M.
Lindgren, G. S.
Soskice, Rt. Hon. Sir F


Edwards, John (Brighouse)
Lipton, Lt.-Col. M.
Sparks, J. A


Edwards, Rt. Hon. N. (Caerphilly)
Logan, D. G.
Steele, T


Edwards, W. J. (Stepney)
Longden, F. (Small Heath)
Stewart, Michael (Fulham, E.)


Evans, Albert (Islington, S. W.)
McAllister, G.
Strachey, Rt. Hon. J.


Evans, E. (Lowestoft)
MacColl, J. E.
Strauss, Rt. Hon. G. R. (Vauxhall)


Evans, S. N. (Wednesbury)
McGhee, H. G.
Stross, Dr. B


Ewart, R.
McInnes, J.
Summerskill, Rt. Hon. Edith


Fernyhough, E.
Mack, J. D
Sylvester, G. O.


Field, Capt. W. J.
McKay, J. (Wallsend)
Taylor, H. B. (Mansfield)


Finch, H. J.
Mackay, R. W. G. (Reading, N.)
Taylor, R J. (Morpeth)


Fletcher, E. G. M. (Islington, E.)
MeLeavy, F.
Thomas, D. E. (Abordare)


Follick, M.
MacMillan, M. K. (Western Isles)
Thomas, George (Cardiff)


Forman, J. C.
McNeil, Rt. Hon. H.
Thomas, I. O. (Wrekin)


Fraser, T. (Hamilton)
MacPherson, Malcolm (Stirling)
Thomas, I R. (Rhondda, W.)


Freeman, J. (Watford)
Mainwaring, W. H.
Thorneycroft, Harry (Clayton)


Freeman, Peter (Newport)
Mallalieu, E. L. (Brigg)
Thurtle, Ernest


Gaitskell, Rt. Hon. H. T N
Mallalieu, J. P. W. (Huddersfield, E.)
Timmons, J.


Ganley, Mrs. C. S.
Mann, Mrs. J.
Tomlinson, Rt. Hon. G.


Gibson, C. W.
Manuel, A. C.
Tomney, F.


Gilzean, A.
Marquand, Rt. Hon. H A
Turner-Samuels, M.


Glanville, J. E. (Consett)
Mathers, Rt. Hon. George
Usborne, Henry


Gooch, E. G.
Mellish, R. J
Vernon, Maj. W. F


Gordon, Walker, Rt. Hon. P. C.
Messer, F.
Viant, S. P


Greenwood, A. W. J. (Rossendale)
Middleton, Mrs. L.
Wallace, H. W.


Greenwood, Rt. Hn. Arthur (Wakefield)
Mikardo, Ian
Watkins, T. E.


Grenfell, D. R.
Mitchison, G. R
Webb, Rt. Hon. M. (Bradford, C.)


Grey, C. F.
Moeran, E. W
Weitzman, D.


Griffiths, D. (Rother Valley)
Monslow, W
Wells, P. L. (Faversham)


Griffiths, Rt. Hon. J. (Llanelly)
Moody, A. S
Wells, W. T. (Walsall)


Griffiths, W. D. (Exchange)
Morgan, Dr. H. B.
West, D. G.


Gunter, R. J.
Morley, R.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Hale, J. (Rochdale)
Morris, P. (Swansea, W.)
White, Mrs. E. (E. Flint)


Hale, Leslie (Oldham, W.)
Morrison, Rt. Hon. H. (Lewisham, S.)
White, H. (Derbyshire, N. E.)


Hall, J. (Gateshead, W.)
Mort, D. L.
Whiteley, Rt. Hon. W


Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
Moyle, A.
Wigg, George


Hamilton, W. W.
Mulley, F. W.
Wilcock, Group-Capt C A. B.


Hardman, D. R.
Murray, J. D.
Wilkes, L.


Hardy, E. A.
Nally, W.
Willey, F. T (Sunderland)


Hargreaves, A.
Neal, H.
Willey, O. G (Cleveland)


Harrison, J.
Noel-Baker, Rt. Hon. P. J.
Williams, D J. (Neath)


Hastings, Dr. Somerville
Oldfield, W. H.
Williams, Ronald (Wigan)


Hayman, F. H.
Oliver, G. H
Williams, W T (Hammersmith, S.)


Henderson, Rt. Hon. A. (Rowley Regis)
Orbach, M.
Wilson, Rt. Hon. J. H. (Huyton)


Herbison, Miss M.
Padley, W. E








Winterbottom, I. (Nottingham, C.)
Woods, Rev. G. S



Winterbottom, R. E. (Brightside)
Wyatt, W. L.
TELLERS FOR THE NOES:


Wise, Major F. J.
Yates, V. F
Mr. Hannan and Mr. Wilkins.


Woodburn, Rt. Hon. A
Younger, Hon. Kenneth

New Clause.—(INTEREST ON TAX IN ARREAR BY REASON OF EXCHANGE RESTRICTIONS.)

Section eight of the Finance (No. 2) Act, 1947, shall have effect with the addition of the following subsection:—
(8) Notwithstanding anything in the previous provisions of this section interest in respect of any tax chargeable in respect of any profits or income which have arisen from sources outside the United Kingdom in the currency of another country shall not begin to run from any date before three months after the said profits or income become freely available to the person on whom the tax is charged in respect of that income for conversion into currency of the United Kingdom in cases where such conversion is rendered impossible by the effect of control exercised by or on behalf of the government of the country, where the income arises."—[Mr. Maudling.]

Brought up, and read the First time.

7.15 p.m.

Mr. Maudling: I beg to move, "That the Clause be read a Second time."
Compared with the issues which the Committee have been considering, this is a relatively small point, and the amount of money involved to the Exchequer also is small, but I hope that this new Clause will be listened to with sympathy on the other side of the Committee, because the grounds on which it is based are grounds of justice. I do not know whether it is social justice or distributive justice, but it seems to me to be justice.
The point at issue is this: Suppose a company is operating overseas and receives certain money in the currency of that country, and that currency is blocked by the operation of the Government of that country. A company resident in London earns a sum of money in Buenos Aires, the payment in pesos are blocked in Buenos Aires and the proceeds cannot be transferred to this country. Nevertheless, the sum represented by these pesos appears in the Income Tax assessment of the company concerned. As soon as the assesment of the company is settled or determined on appeal, the company becomes liable to pay Income Tax in sterling on the equivalent of the pesos.
The company becomes liable to pay tax in sterling, and if the tax remains unpaid, the company becomes also liable to pay interest on the outstanding amount. That,

it seems to me, is not a fair situation from the taxpayer's point of view. The company concerned, although it has earned foreign exchange, cannot get the benefit of it because it is unable to transmit the money to this country. The Revenue authorities, I understand, will not be prepared to accept payment in foreign exchange. They require payment in sterling. If the company cannot get the sterling out of which to pay the Income Tax assessment, it seems to me that in those circumstances it is quite wrong that the company should become liable to pay interest.
The purpose of this new Clause is to provide that until the foreign exchange concerned is unfrozen and the proceeds are transmitted to this country, the company earning the money should not be liable to pay interest on the outstanding assessment. It may be argued that although the money cannot be transmitted, the company possessing it is earning interest on the money in Buenos Aires. I think that the answer is that if that interest has accumulated and is finally transmitted to this country it will have to bear tax whereas the interest paid by the company on the outstanding assessment cannot be charged against tax. I think that in the present circumstances companies are being asked to pay Income Tax on sums which they have earned abroad, but which they cannot enjoy in this country.
I hope that the Solicitor-General will listen with sympathy to this argument, because on a similar point the other evening in connection with a Clause dealing with the recovery of German enemy debts, I put it to him that it was wrong to take the recovery into consideration until the person making the recovery was able to enjoy the proceeds. I think that he concurred in that argument. This is precisely the same argument, that until the individual obtains in sterling the foreign exchange he has earned, he should not be liable to pay interest on tax assessment overdue.

Lieut.-Commander Gurney Braithwaite: The spectacle on the Treasury Bench of the right hon. and learned Solicitor-General leads us to hope


that this new Clause may find favour with His Majesty's Government. It has been our experience so far, in previous stages of the Bill, that when the right hon. and learned Gentleman is in charge an amenable atmosphere immediately prevails, and he generally meets our modest requests. Quite apart from the presence of the Law Officer who enjoys this reputation, the case in equity is so strong that no one can for a moment imagine the Government resisting it.
My hon. Friend the Member for Barnet (Mr. Maudling) has laid it before the Committee in the most lucid manner, and I am certain the Solicitor-General will realise at once that this new Clause, differing as it does from the wide issues cm the previous new Clause which we have discussed for some three hours, merely asks for a modest adjustment. This is not a case of the Government failing to collect their Revenue. All that the new Clause seeks to do is to ask for postponement of such payment until the money is available here in this country. To do the opposite, and to charge these arrears of Income Tax in circumstances where the taxpayer is unable to provide the money because it has been blocked by the action of another Government, seems to be comparable only to starting a heavy cart up a steep hill, putting on all the brakes and then flogging the unfortunate horse for his failure to pull the load to the top.
It is quite true that there is an unhappy precedent for this sort of thing, but it is of a rather different character, namely, that when the Special Contribution was levied in the Finance Act of two years ago, there was an interest charge made on payments in arrears before assessment had been even computed or agreed upon. I hope that the Solicitor-General is not going to quote so undesirable a precedent. This is an entirely different situation. This is a case where the money is kept abroad. I cannot conceive that the Government will engage in such an act of fiscal sadism as to charge taxation in such circumstances. I shall not stand between Members and the Solicitor-General, who I know is anxious to rise to his feet and accept this Clause.

The Solicitor-General (Sir Frank Soskice): The Clause goes a great deal too far, but may I say at once that I

think it possible to go some distance which I hope will be satisfactory to the hon. Member for Barnet (Mr. Maudling), in meeting his wishes? Stated simply and without qualification, there seems to be a certain amount of justice in the proposal put forward, but the difficulty is that there is a wide variety of cases. We may have a trader or individual who has a small foreign income that is frozen in the country in which it arises, and a large income in this country. There can be no reasonable grounds in his case for withholding payment, when it can be made from his income here, in respect of his assets in another country.
Foreign exchange restrictions differ in various countries—some are looser and some are stricter. Many companies trading in foreign countries for their own purposes leave a good deal of their income there to carry on their trade in those countries. It would give a good deal of scope for evasion if there were not some inducement for companies to try and realise their assets and get them here. It might be very easy for them not to press an application, or in some other way to avoid getting their income here on the pretext that it is frozen, whereas in point of fact the exchange system would permit an application under given circumstances.
The hon. Member also pointed to the fact that we might have a company here which, in spite of its frozen income abroad, invests that income abroad and earns interest on it. It is perfectly true that they have to pay English Income Tax and Profits Tax. He might also have said that they would have to pay the foreign income tax and profits tax, but under our new unilateral system there would, broadly speaking, be a charge of only one lot of tax upon it. In principle, this can be said against the Clause, that there are many other reasons which might make it difficult for an individual to pay tax apart from the fact that his income is frozen. There are many other considerations that can be envisaged to excuse payment.
As Members know, as my right hon. and learned Friend so stated in answer to a Question put to him, when the situation arises in which a trader has income that is frozen abroad, the practice of the Revenue authorities is not to call for payment where it would involve


serious hardship. Where the taxpayer has a substantial income in this country from which he can pay the Revenue authorities, they quite rightly require payment to be made. As the law stands, in cases in which they agree not to press for payment, the 1947 Act imposes an interest charge and makes it obligatory on the Revenue authorities to charge interest. It seems right, therefore, that in those cases where they think it is not appropriate to press for payment they should not also be obliged to impose an interest charge.
The proposal I have to make is that where the Revenue authorities, owing to the existence of some hardship, do not require payment of tax in accordance with their practice—that is to say, they hold over payment—they should also not be obliged to impose an interest charge on the unpaid tax. If the hon. Member agrees to withdraw the Clause, I propose to put down a suitable Amendment between now and Report stage in those terms.
My proposal is that in a case where, owing to hardship and in accordance with the practice of the Revenue authorities, they do not require immediate payment of tax, and where they are bound by statute to impose an interest charge, they should not be bound by statute to impose that charge, and therefore the payment which is held over, and for so long as it is held over, will not carry an interest charge. I think that meets the justice of the case, and I ask the hon. Member to consider whether he ought not to withdraw his Clause.

Mr. Manningham-Buller: As usual, the Solicitor-General has endeavoured to be conciliatory, but on this occasion he has been far less forthcoming than on previous occasions in the course of our discussions. There are many precedents for the acceptance of Amendments and Clauses from this side without substantial alterations. The Solicitor-General is basing his opposition to this Clause, which has been moved in such a reasonable and clear speech by my hon. Friend the Member for Barnet (Mr. Maudling), upon four grounds which do not stand close examination. I hope that on further consideration he will say he will have the matter reconsidered.
We welcome, of course, the slight concession the Solicitor-General has given us.

Obviously, it is inequitable that, where the Revenue authorities regard the payment of tax due as involving serious hardship and so postpone payment, interest on that tax should automatically accrue. Apart from anything else, whether the Clause is withdrawn or not, now that this point has been drawn to the attention of the Solicitor-General, I should have thought he would have said, without making any bargain about it, that the Government will put this matter right and he will take powers to relieve from interest these payments where the Revenue authorities consider there is hardship.
7.30 p.m.
The last ground that he advanced was that if this Clause were passed there would be no inducement to companies who earn income overseas to bring their money back here. That is not doing justice to this Clause, because before any company could take advantage of it they would have to establish affirmatively and, in my view, conclusively, that they tried to bring the money back and that they had been prevented by reason of the exchange restrictions imposed by a foreign government. I cannot feel that so long as those two conditions are there, there is any possibility of evasion of tax by reason of a company with foreign income not making the effort to bring it back here. If that effort were not made, relief from Income Tax liability would not arise. I suggest therefore, that the right hon. and learned Gentleman's argument has no force in it.

Mr. Donovan: This Clause would need redrafting if the onus were put upon the taxpayer to prove the relevant facts.

Mr. Manningham-Buller: I should have thought from the Clause that the onus would have laid upon those seeking to take advantage of it—the company in question—but if there be any doubt about it, that is a matter of redrafting which can easily be corrected. I am more concerned in trying to get to the principle of this matter, and I am seeking to answer the argument of the right right hon. and learned Gentleman that this could not be accepted in principle because there would be no inducement to people overseas to bring their income back. In answer to that, I am saying


that I should have thought that, provided the relief from tax only arises when it is established that this money cannot be brought back here, there would be no inducement to the companies not to get their money back. I hope I have made the point clear to the right hon. and learned Gentleman, because I do not want to take up any more time than I need do on this Clause.
Another argument put forward was that this money, if left overseas, might earn interest. It probably would. It might be invested, but there again any interest that the money earned would in itself surely be liable to tax in this country, if the original capital represented money that was due for taxation in this country. I should have thought that that was not a very valid reason for rejecting the Clause, which deals, subject to adequate safeguards, with a matter of principle.
I have dealt with all the arguments which the Solicitor-General advanced except with regard to the first—that it was not right to seek to relieve a company, which earns the greater part of its income in this country, from taxation liability in respect of certain income earned overseas which is blocked. Why should the Inland Revenue be left to judge what, in their opinion, is a case involving serious hardship? Would it not be better in Statute Law—if possible to lay down clearly the position? After all, the principle which the right hon. and learned Gentleman is seeking to retain might mean that a company, in the course of time, would become denuded of all its assets in this country through payment of tax, while holding large sums in blocked capital overseas.
The existing practice of recognising hardship recognises the inequality of the present principles. While welcoming the concession that the right hon. and learned Gentleman has indicated that he is prepared to give, and asserting that that concession should not be made conditional in any shape or form because it is obviously right that it should be given, I ask the Solicitor-General to give further consideration to this matter, because if he does not I doubt whether my hon. Friends will be satisfied with what he has proposed.

Mr. Drayson: The point which occurs to me after the Solicitor-General's

remarks is that he is expecting far too much of the traders. The first thing about this profit, which is subject to tax, is that it has already been ascertained. When it has been established that an industrial concern or individual has made a profit overseas, which cannot be brought immediately to this country, the matter is in the hands of the exchange control authorities. The national, having acquired foreign currency which he is anxious to convert into sterling, discovers that the transaction must be handled by the Bank of England and through the machinery of exchange control. The individual or his agents can go to the government which is blocking the capital, but that he should be expected to go and get that particular amount of money released is expecting rather too much.
Once a foreign government has indulged in exchange restrictions, then it is a matter that can only be settled between the exchange control authorities in this country and the foreign government concerned. If there is no exchange control arising, there is no excuse for the individual not bringing back his capital to this country, but where the fact of repatriation is beyond his control then I should have thought that the case was established quite definitely without his having to prove to the authorities that he has made every effort to recover his funds.
I am not satisfied with the Solicitor-General's final remarks. He says that some instructions will be given so that the Revenue authorities shall not be obliged to charge interest on these amounts. There are two points arising here. First, if the profit is subject to tax it will have been ascertained, and if it cannot be brought back to this country it will be for reasons beyond the control of the firm or individual concerned. If it is within their control to bring it back, nobody would be adverse to interest being charged if they failed to discharge their debt by repatriating this money. Where the exchange control authorities can inform the Inland Revenue authorities that this money cannot be readily repatriated, then I think no interest should be charged, and the question of "not being obliged to charge it" should be put in more emphatic terms.

Mr. Nabarro: In order that the Committee may be fully apprised


of the financial perspective, may I ask what would be the cost to the Government for this year and for a full year if the Clause were accepted, and similarly, the cost if the concession suggested by the Solicitor-General were substituted. In my opinion the sum of money involved is so tiny that it would not be unreasonable to ask the Government to accept the Clause.

Mr. Watkinson: The extraordinary facing-both-ways behaviour of the Government bears hardly upon business men in matters of taxation and is a great block to and weight upon people who are trying to do what they have been asked to do by the Government—go out into foreign markets and do more business for this country.
I should like to bring to the Solicitor-General's notice a case raised by a constituent of mine. I understand that in Brazil there is legislation which prohibits the remittance of profits in excess of 8 per cent. on capital. There is a case in point of a British concern which has obeyed the behest of the present Government by increasing its commitments in Brazil. It finds itself now denuded of its sterling resources in this country by the operation of a Brazilian financial measure over which it has no control.
I am sure that the cost to the country of the present proposal will be extremely small, but the Government might thereby give a little encouragement to many businesses trading abroad under difficult conditions. They would also do something to correct the facing-both-ways attitude by which, on the one hand, they press the business community to go ahead and find more business in overseas markets and say by inference that unless business men do so they are not pulling their weight in the Socialist State; and, on the other hand, they make it very difficult. They are not playing the part, which I believe the Government should play, of assisting the business community to go abroad for trade. I think the Clause should be accepted by the Government in its entirety. I do not think it is an important financial matter but it would be a great encouragement, particularly to businesses trading in South America.

Mr. Hollis: I think my hon. Friend the Member for Woking (Mr. Watkinson) has sufficiently shown the

Solicitor-General that cost cannot really have any place in the consideration of this matter. I join with him in pressing the Clause upon the Solicitor-General from the point of view of national interest. The principle that a firm earning one income in this country and another income abroad should be considered under an obligation to pay Income Tax immediately on both incomes solely out of the domestic income because the foreign income is not convertible is very dangerous. It is obviously in the public interest that domestic firms should open up foreign branches, but this kind of legislation would be an enormous discouragement. I join in pleading with the Solicitor-General to make this concession, which would cost very little and would enormously recoup itself in the encouragement to traders to continue the export drive.

7.45 p.m.

Mr. Niall Macpherson: I should like to throw the Solicitor-General's argument back at him. I have lived in a country where it was impossible to remit profits. The impression we got was that the Treasury were not bringing sufficient pressure on that country to enable the profits to be remitted because they were able to get their taxes without doing so. It is not a matter of companies wishing to leave profits out there, because if a company cannot get its profits back there is precious little advantage to it in investing the profit in the other country. I remember a case where it was actually not possible even to get interest on the profits that had been made. The profits had to be placed in a blocked account on which there was no interest, yet the company were having at the same time to pay interest on its property.
I see the Solicitor-General's difficulty, but I would remind him that, as a matter of practice, most companies are paying the tax rather than pay the interest. As a matter of principle, surely that is wrong. A criterion should not be whether the company can pay the tax but whether the profits have been remitted to this country or not. On that matter of principle we should stand in this Committee. The Solicitor-General should state quite clearly that the Treasury will do their best to assist traders to get their money


back and that when the money is back, and only then, will the Treasury tax it.

Sir William Darling: The refusal of the Government to accept the Clause is a matter that the Board of Trade should look at. Business men who have stormed foreign countries for trade are now treated as guilty men and are being punished. That is hardly in keeping with the policy expressed by the President of the Board of Trade. To penalise a business man who is doing business overseas under great difficulties simply because the Government cannot make effective exchange arrangements is a very grievous hardship.
The difficulty arises because the Government are unable to come to satisfactory exchange control arrangements with countries with which trade is being done. That is a matter for which the business man is not responsible but the burden is placed on him and he is penalised. Having made a profit which he cannot get his hands on or materialise, he is being charged upon it by His Majesty's Government. That is outrageous. The preposterous suggestion was made by the Solicitor-General that because a man has an income in this country he should pay taxation out of it upon the profits which he cannot materialise from another country. That is grossly unfair. I am thinking of the large insurance companies many of which have done business under great difficulties in South America. If it is the policy of His Majesty's Government that they are to be charged upon profits which they cannot bring to this country, it will have a very disquieting effect. Savings in this country are also indirectly involved.
Like my hon. Friend the Member for Kidderminster (Mr. Nabarro), I should be surprised if a large sum is involved and if it is really worth the time we have spent discussing it. Doubtless the Solicitor-General knows what the sum is. It must be very trifling, and if it is, his promise to treat these matters considerately is not enough. He should accept the Clause in its entirety and reassure those who are doing business overseas that the difficulties they are undergoing, which are not of their creation, shall not be added to by His Majesty's Government but that everything

will be done to facilitate their efforts to expand our trade.

Mr. Eccles: I am sure that the Solicitor-General will agree that we are asking for a very small concession. Now that the Government give large guarantees through the Export Credit Guarantees Department, some of which run into enormous sums of money, for the purpose of inducing traders to go into markets where exchange convertibility is by no means assured, is it not reasonable to ask the Solicitor-General to give us this very small concession? When one considers that the United States Government, as one of the provisions of the E.C.A. Act, actually offer a guarantee of dollar convertibility for principal and interest up to 300 million dollars to approved firms who are investing overseas, one sees what an enormous inducement such a guarantee can be.
I am not in favour of guaranteeing what I might call unilateral convertibility. One needs to bring some pressure on foreign countries. If they want capital they must play fair. I should not be in favour of giving away everything in that respect and saying that if anyone puts British money into a foreign country the British Government will guarantee to get it out again. There should be some pressure on the foreign country to come to a proper trade and payments agreement with us.
This is a very small thing and it is a deterrent which arises simply from our own Income Tax procedure. I hope that between now and the next stage we shall get, not just a little concession, but something which really covers the whole thing.

The Solicitor-General: I have listened carefully to the arguments, but I am very sorry to say that I feel that I cannot go further than the proposal which I made. I would say at once that it is wrong to think that the Government are not doing what they can to assist traders and British taxpayers in this respect. They are doing all they can in negotiations, for example, with countries like the Argentine, to get them to relax or abolish the restrictions on the remittance of trading profits, so that the assumption made by two hon. Members is really without foundation.
I should like the Committee to consider it in this light. I said in the course of my former speech that there are many cases of hardship and that if one started saying that a case of hardship, which might not be as severe as other cases of hardship where interest is charged, were a ground for an exemption, it would be very difficult to resist very many claims on very many other grounds. The result would be that in a certain space of time it would be impossible to administer this provision with regard to interest. Also, it really is nothing like as simple as hon. Members feel.
I think hon. Members have looked in far too disparaging a light at the proposal which I have made. My right hon. Friend was asked a question in regard to the situation of these incomes frozen in foreign countries and he said that where payment of the tax in question could not be made at the due date without serious hardship, it was the practice of the Inland Revenue authorities to allow payment to stand over until funds to meet it became available. That is the practice. Section 8 of the 1947 Act imposes the interest charge. As that section stands at the moment, it is obligatory upon the Revenue authorities to charge interest upon these tax debts even if they are allowed to stand over. My proposal is that it should not be obligatory to impose the interest charge in cases in which the Revenue authorities think it right that the tax debt should stand over. I think that that would meet the kind of case which hon. Gentlemen opposite have been describing.
If one takes the case of a large company with a small trading income abroad and a large trading income in this country, I suggest that it is quite unreasonable that that company, having ample income and assets from which to pay the tax on the foreign income, should not be called upon to pay it. [HON. MEMBERS: "Why"?] I suggest that in a case of that sort it would be perfectly proper that the interest charge should be imposed in the event of their not paying. That is one kind of case, and that kind of case would be covered if I accepted the Clause in its present form. It would mean that in such a case no interest charge would be made. I hope that the Committee will agree that it is quite unreasonable to press me to go as far as that.
Let us take the other kind of case in which it really is difficult to expect a taxpayer to pay, where it involves really serious hardship because he has no assets here and nothing out of which he can pay. In those cases the Revenue authorities allow the collection of the tax to stand over. My proposal is that in those cases the interest charge should not of necessity be imposed pursuant to the terms of the Statute; the Statute should in that regard be relaxed. No doubt the Revenue authorities would not ask for payment of interest in a case of that sort. That is the proposal that I make, and I make it in the firm belief that it meets the kind of case in which it would be hard to impose a charge on the taxpayer.
Hon. Members referred to the fact that companies which invest their frozen foreign income have to pay British Income Tax on it. That is perfectly true. If they have a large amount of frozen foreign income invested overseas which really should be paid in tax, and they draw income from it which they may use for the purposes of their trade overseas and they pay British tax on it, the untaxed portion is what I might describe as a net revenue to them. It is not unreasonable that in a case like that, if they can pay their tax out of other assets without serious hardship, they should be charged the interest charge on that invested foreign income.
Therefore, I am afraid that, although I have listened carefully to the arguments that have been advanced. I cannot see my way to go further than the proposal which I made, my main reason being that if one goes to the length to which this Clause invites the Government to go, it is logically impossible not to start making a whole number of other exceptions to the obligation to impose the interest charge, and if one does that one might as well put a pen through the Section imposing the interest charge. In quite a short space of time it would be unworkable, and its object of inducing reasonably early payment of Income Tax would certainly not be achieved and the Section might just as well not be in the 1947 Act, I hope that the Committee will agree that my proposal is reasonable and that I could not reasonably be asked to go further.

Mr. Nabarro: Before the right hon. and learned Gentleman sits down, will


he answer the questions I put to him? If there is any doubt about them, I will repeat them: first, what would it cost in a full year if the Clause were accepted in toto, and what would it cost this year; second, what would the proposal of the right hon. and learned Gentleman cost in a full year and what would it cost this year?

The Solicitor-General: It is really next to impossible to give anything like a reasonable estimate. As I said earlier, the exchange control systems of foreign countries differ very greatly. They depend in large measure on the making of an application for permission to take foreign income out of the country concerned, and if there were the relaxation which is proposed in the Clause, it is impossible to say what sort of applications would be made. As I pointed out, it is often to the advantage of companies to leave income in foreign countries because they use it for the purpose of their trading enterprises in those countries. It is really very difficult to give anything like a reliable estimate of the figure. I quite agree that it cannot be a large sum, but the object of the imposition of the interest charge, as hon. Members will remember when they think back to the Debates which we had on the second Finance Bill in 1947, was to induce the earlier payment of Income Tax.

8.0 p.m.

Mr. Nabarro: Surely the argument adduced in the Debate on the 1947 Finance Bill was simply that this interest charge would be levied to expedite payment of Income Tax and Profits Tax and Surtax in this country, and it was never intended that it should be applied to overdue amounts in respect of foreign investments.

The Solicitor-General: It was to expedite the payment of British Income Tax which is imposed on the income of British traders in this country, but it is also imposed on them in respect of their income arising in other countries. Therefore, it is directly within the purpose of the Section.

Mr. Maudling: Naturally I am grateful to the Solicitor-General for the concession he has made, and I hope he will not think me ungrateful if I say I still feel there is an issue of principle between us on this matter. As far as I can see,

in making his concession the Solicitor-General based it on the argument of hardship. In other words, the Government will make a concession where there is a hardship. I was trying to base my argument on the issue of justice. People should not pay interest on a tax assessment when the sum for which they are being assessed is not available to them. Therefore, I cannot see how any consideration arise of the size of the sum involved and the relative size of the assets in this country. I feel there is a fundamental principle of issue between us on this matter.

Mr. Manningham-Buller: I was disappointed with the right hon. and learned Gentleman's reply to this Debate for it shows that he has not fully appreciated the weight of the case we are putting in support of this new Clause on a matter of principle. Of course, we welcome his concession, for it is obviously right that such a change should be made in the present law. I do not wish to appear to minimise the extent of that alteration of the law, but it only amounts to this, that relief from payment of interest will only be granted in those cases where the Revenue come to the conclusion that there is hardship. So the number of cases in which that relief is granted will depend upon the judgment of the Revenue.
The right hon. and learned Gentleman has sought to impress upon us the difficulty of determining between different hard cases. I recognise that difficulty exists but, so far as his concession is concerned, that again will depend in each case upon the length of the Chancellor's foot—if I may use that expression. I feel it is quite inequitable to say that interest shall be paid on tax due in respect of monies which the owner cannot bring back into this country. I can see no justification for saying that such interest should be paid merely because there are other assets available in this country upon which, if necessary, distraint could be levied. That is a matter of principle.
I am not particularly tied to the wording of this new Clause, although it is good, but I am disappointed that the right hon. and learned Gentleman does not realise the justice of our case and has not said that he will give further consideration to this matter. No one wants to see any such Clause as this used for the purposes of tax evasion. I believe it


is possible to draw the Clause in such a way that this would not occur successfully—indeed, to draw it in such a way that there is every inducement to these companies to make every effort to get their money back to this country.
While we welcome the efforts the Treasury are making to get relaxation of these exchange restrictions, it would be a strong incentive to the Treasury to make even greater efforts to secure that relaxation because, if the Solicitor-General

accepted this new Clause, it would then have very little operation. I am disappointed with the reply, and unless the right hon. and learned Gentleman can go a bit further we shall have no other course open to us than to show our disappointment in the Division Lobby.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 276; Noes, 297.

Division No. 41.]
AYES
[8.9 p.m.


Aitken, W. T.
Deedes W F.
Johnson, Howard S. (Kemptown)


Alport, C. J. M.
Digby, S. Wingfield
Jones, A. (Hall Green)


Amery, J. (Preston, N.)
Dodds-Parker, A. D
Joynson-Hicks, Hon. L. W


Amory, D. Heathcoat (Tiverton)
Donner, P. W.
Kaberry, D.


Arbuthnot, John
Douglas-Hamilton, Lord M
Keeling, E. H.


Ashton, H. (Chelmsford)
Drayson, G. B.
Kerr, H. W. (Cambridge)


Assheton, Rt. Hon. R. (Blackburn, W.)
Drewe, C.
Kingsmill, Lt.-Col. W. H.


Astor, Hon. M.
Dugdale, Maj. Sir T. (Richmond)
Lambert, Hon. G.


Baker, P.
Duncan, Capt. J. A. L.
Lancaster, Col. C. G


Baldock, J. M.
Dunglass, Lord
Langford-Holt, J.


Baldwin, A. E.
Duthie, W. S.
Law, Rt. Hon. R. K


Banks, Col. C
Eccles, D. M.
Leather, E. H. C.


Baxter, A. B
Eden, Rt. Hon. A.
Legge-Bourke, Maj. E. A. H


Beamish, Maj. T. V. H.
Elliot, Lieut.-Col. Rt. Hon. Walter
Lindsay, Martin


Bell, R. M.
Erroll, F. J.
Linstead, H. N.


Bennett, Sir P. (Edgbaston)
Fisher, Nigel
Llewellyn, D.


Bennett, R. F. B. (Gosport)
Fletcher, W. (Bury)
Lloyd, Rt. Hon. G. (King's Norton)


Bevins, J. R. (Liverpool, Toxteth)
Fort, R.
Lloyd, Maj. Guy (Renfrew, E.)


Birch, Nigel
Foster, J. G.
Lloyd, Selwyn (Wirral)


Bishop, F. P.
Fraser, Hon. H. C. P. (Stone)
Lockwood, Lt.-Col. J. C.


Black, C. W.
Fraser, Sir I. (Lonsdale)
Longden, G. J. M. (Herts, S. W.)


Boles, Lt-Col. D. C. (Wells)
Galbraith, Cmdr. T D. (Pollok)
Low, A. R. W.


Boothby, R.
Gammans, L. D
Lucas, Major Sir J. (Portsmouth. S)


Bossom, A. C.
Garner-Evans, E. H (Denbigh)
Lucas, P. B. (Brentford)


Bower, N.
Gates, Maj. E. E.
Lucas-Tooth, Sir H.


Boyd-Carpenter, J. A.
Glyn, Sir R.
Lyttelton, Rt. Hon. O.


Bracken, Rt. Hon. Brendan
Gomme-Duncan, Col. A.
McCallum, Maj. D.


Brains, B.
Gridley, Sir A.
McCorquodate, Rt. Hon. M. S.


Braithwaite, Lt.-Comdr. J. G.
Grimston, Hon. J. (St. Albans)
Macdonald, Sir P (I. of Wight)


Bromley-Davenport, Lt.-Col. W.
Grimston, R. V. (Westbury)
Mackeson, Brig. H. R.


Brooke, H. (Hampstead)
Harden, J. R. E.
McKibbin, A


Browne, J. N. (Govan)
Hare, Hon. J. H. (Woodbridge)
McKie, J. H (Galloway)


Buchan-Hepburn, P. G. T.
Harris, F. W. (Croydon, N.)
Maclay, Hon. J. S.


Bullock, Capt. M.
Harris, R. R. (Heston)
Maclean, F H. R.


Bullus, Wing-Commander E. E.
Harvey, Air-Codre A. V. (Macclesfield)
MacLeod, Iain (Enfield, W.)


Burden, Squadron-Leader F. A.
Harvey, I. (Harrow, E.)
MacLeod, John (Ross and Cromarty)


Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
Hay, John
Macpherson, N. (Dumfries)


Carr, L. R. (Mitcham)
Head, Brig. A. H
Maitland, Comdr. J. W


Carson, Hon. E.
Heald, L. F
Manningham-Buller, R. E.


Channon, H.
Heath, Col. E. R.
Marlowe, A. A. H.


Churchill, Rt. Hon. W. S.
Henderson, John (Cathcart)
Marples, A. E.


Clarke, Col. R. S. (East Grinstead)
Hicks-Beach, Maj. W W
Marshall, D. (Bodmin)


Clarke, Brig. T. H. (Portsmouth, W.)
Higgs, J. M. C.
Marshall, S. H. (Sutton)


Clyde, J. L.
Hill, Mrs. E. (Wythenshawe)
Maude, A. E. U. (Ealing, S.)


Colegate, A.
Hill, Dr. C. (Luton)
Maude, J. C. (Exeter)


Conant, Maj. R. J. E.
Hirst, Geoffrey
Maudling, R.


Cooper, A E. (Ilford, S.)
Hogg, Hon. Q.
Mellor, Sir J.


Cooper-Key, E. M.
Hollis, M. C.
Molson, A. H. E.


Corbet, Mrs. F. K. (Peckham)
Holmes, Sir J. Stanley (Harwich)
Morrison, Maj. J. G. (Salisbury)


Corbett, Lieut.-Col, U. (Ludlow)
Hope, Lord J
Morrison, Rt. Hon. W. S. (Cirencester)


Craddock, G. B. (Spelthorne)
Hopkinson, H. L. D'A
Mott-Radclyffe, C. E.


Cranborne, Viscount
Hornsby-Smith, Miss P
Nabarro, G.


Cross, Rt. Hon. Sir R.
Horsbrugh, Miss F.
Nicholls, H.


Crosthwaite-Eyre, Col. O. E.
Howard, G. R. (St. Ives)
Nicholson, G.


Crouch, R. F
Howard, S. G. (Cambridgeshire)
Nield, B. (Chester)


Crowder, Capt. John F. E. (Finchley)
Hudson, Sir Austin (Lewisham, N.)
Noble, Comdr. A. H. P.


Crowder, F. P. (Ruislip-Northwood)
Hudson, Rt. Hon. R. S. (Southport)
Nugent, G. R. H.


Cundiff, F. W.
Hudson, W. R. A. (Hull, N.)
Nutting, Anthony


Cuthbert, W. N.
Hulbert, Wing-Cdr. N. J.
Oakshott, H. D.


Darling, Sir W. Y. (Edinburgh, S.)
Hutchinson, Geoffrey (Ilford, N.)
Odey, G. W.


Davidson, Viscountess
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
O'Neill, Rt. Hon. Sir H.


Davies, Nigel (Epping)
Hyde, H. M.
Ormsby-Gore, Hon. W. D.


de Chair, S.
Hylton-Foster, H. B.
Orr, Capt. L. P. S.


De la Bère, R.
Jeffreys, General Sir G.
Orr-Ewing, Charles Ian (Hendon, N.)



Jennings, R.
Orr-Ewing, Ian L. (Weston-super-Mare)




Osborne, C.
Smith, E. Martin (Grantham)
Turton, R. H.


Perkins, W. R. D
Smithers, Peter H. B. (Winchester)
Tweedsmuir, Lady


Peto, Brig. C. H. M.
Smithers, Sir W (Orpington)
Vane, W. M. F.


Pickthorn, K.
Smyth, Brig. J. G. (Norwood)
Vaughan-Morgan, J. K.


Pitman, I. J.
Snadden, W. McN.
Vosper, D. F.


Powell, J. Enoch
Soames, Capt. C.
Wade, D. W.


Prescott, Stanley
Spearman, A. C. M.
Wakefield, E. B. (Derbyshire, W.)


Price, H. A. (Lewisham, W.)
Spence, H. R. (Aberdeenshire, W.)
Wakefield, Sir W. W. (St. Marylebone)


Prior-Palmer, Brig. O.
Spens, Sir P. (Kensington, S.)
Walker-Smith, D. C.


Profumo, J. D.
Stanley, Capt. Hon. R. (N. Fylde)
Ward, Hon. G. R. (Worcester)


Raikes, H. V.
Stevens, G. P.
Ward, Miss I. (Tynemouth)


Rayner, Brig. R.
Steward, W. A. (Woolwich, W.)
Waterhouse, Capt. C.


Redmayne, M.
Stoddart-Scott, Col. M.
Watkinson, H.


Remnant, Hon. P.
Storey, S.
Watt, Sir G. S. Harvie


Renton, D. L. M.
Strauss, Henry (Norwich, S.)
Webbe, Sir H. (London)


Roberts, P. G. (Heeley)
Stuart, Rt. Hon. J. (Moray)
White, J. Baker (Canterbury)


Robertson, Sir D. (Caithness)
Studholme, H. G.
Williams, C. (Torquay)


Robinson, J. Roland (Blackpool, S.)
Summers, G. S.
Williams, Gerald (Tonbridge)


Robson-Brown, W. (Esher)
Sutcliffe, H.
Williams, Sir H. G. (Croydon, E.)


Rodgers, John (Sevenoaks)
Taylor, C. S. (Eastbourne)
Wills, G.


Roper, Sir H
Taylor, W. J. (Bradford, N.)
Wilson, Geoffrey (Truro)


Ropner, Col L
Teeling, William
Winterton, Rt. Hon. Earl


Ross, Sir R. D. (Londonderry)
Thomas, J. P. L. (Hereford)
Wood, Hon. R.


Russell, R. S.
Thompson, K. P. (Walton)
York, C.


Ryder, Capt. R. E. D
Thompson, R. H. M. (Croydon, W.)
Young, Sir A. S. L.


Savory, Prof. D. L.
Thorneycroft, G. E. P. (Monmouth)



Scott, Donald
Thornton-Kemsley, C. N.
TELLERS FOR THE AYES:


Shepherd, W. S. (Cheadle)
Tilney, John
Major Wheatley and


Smiles, Lt.-Col. Sir W.
Touche, G. C.
Mr. T. G. D. Galbraith.




NOES


Acland, Sir Richard
Cripps, Rt. Hon. Sir S.
Griffiths, Rt. Hon. J. (Llanelly)


Adams, Richard
Crosland, C. A. R.
Griffiths, W. D. (Exchange)


Albu, A. H.
Crossman, R. H. S.
Gunter, R. J.


Allen, A. C. (Bosworth)
Cullen, Mrs. A.
Hale, J. (Rochdale)


Anderson, F. (Whitehaven)
Daggar, G.
Hale, Leslie (Oldham, W.)


Attlee, R. Hon. C. R.
Daines, P.
Hall, J. (Gateshead, W.)


Awbery, S. S.
Darling, G. (Hillsboro')
Hall, Rt. Hn. W. Glenvil (Colne V'll'y)


Ayles, W. H.
Davies, A. Edward (Stoke, N.)
Hamilton, W. W.


Bacon, Miss A.
Davies, Ernest (Enfield, E.)
Hannan, W.


Baird, J
Davies, Harold (Leek)
Hardman, D. R.


Balfour, A.
Davies, R. J. (Westhoughton)
Hardy, E. A.


Barnes, Rt. Hon. A. J.
Davies, S. O. (Merthyr)
Hargreaves, A.


Bartley, P.
de Freitas, Geoffrey
Harrison, J.


Bellenger, Rt. Hon. F. J.
Deer, G.
Hastings, Dr. Somerville


Benson, G.
Delargy, H. J.
Hayman, F. H.


Beswick, F.
Dodds, N. N.
Henderson, Rt. Hon. A. (Rowley Regis)


Bevan, Rt. Hon. A. (Ebbw Vale)
Donnelly, D.
Herbison, Miss M.


Bing, G. H. C.
Donovan, T. N.
Hewitson, Capt. M.


Blackburn, A. R.
Driberg, T. E. N.
Hobson, C. R.


Blenkinsop, A.
Dugdale, Rt. Hon. J. (W. Bromwich)
Holman, P.


Boardman, H.
Dye, S.
Holmes, H. E. (Hemsworth)


Booth, A.
Ede, Rt. Hon. J. C.
Houghton, Douglas


Bottomley, A. G.
Edelman, M.
Hoy, J.


Bowen, R
Edwards, John (Brighouse)
Hubbard, T.


Bowles, F. G. (Nuneaton)
Edwards, Rt. Hon. N. (Caerphilly)
Hudson, J. H. (Ealing, N.)


Braddock, Mrs. E. M.
Edwards, W. J. (Stepney)
Hughes, Emrys (S. Ayr)


Brockway, A. Fenner
Evans, Albert (Islington, S. W.)
Hughes, Hector (Aberdeen, N.)


Brook, D. (Halifax)
Evans, E. (Lowestoft)
Hughes, Moelwyn (Islington, N.)


Brooks, T. J. (Normanton)
Evans, S. N. (Wednesbury)
Hynd, H. (Accrington)


Broughton, Dr. A. D. D.
Ewart, R.
Hynd, J. B. (Attercliffe)


Brown, George (Belper)
Fernyhough, E.
Irvine, A. J. (Edge Hill)


Brown, T. J. (Ince)
Field, Capt. W. J.
Irving, W. J. (Wood Green)


Burke, W. A.
Finch, H. J.
Isaacs, Rt. Hon. G. A.


Burton, Miss E.
Fletcher, E. G. M. (Islington, E.)
Janner, B.


Butler, H. W. (Hackney, S.)
Follick, M.
Jay, D. P. T.


Callaghan, James
Forman, J. C.
Jeger, G. (Goole)


Carmichael, James
Fraser, T. (Hamilton)
Jenkins, R. H.


Castle, Mrs. B. A.
Freeman, J. (Watford)
Johnson, James (Rugby)


Champion, A. J.
Freeman, Peter (Newport)
Johnston, Douglas (Paisley)


Chetwynd, G. R.
Gaitskell, Rt. Hon. H. T. N.
Jones, D. T. (Hartlepool)


Clunie, J.
Ganley, Mrs. C. S.
Jones, Frederick Elwyn (West Ham, S.)


Cocks, F. S.
George, Lady M. Lloyd
Jones, Jack (Rotherham)


Coldrick, W.
Gibson, C. W.
Jones, William Elwyn (Conway)


Collick, P.
Gilzean, A.
Keenan, W.


Collindridge, F.
Glanville, J. E. (Consett)
Kenyon, C.


Cook, T. F.
Gooch, E. G.
Key, Rt. Hon. C. W.


Cooper, G. (Middlesbrough, W.)
Gordon, Walker, Rt. Hon. P. C.
King, H. M.


Cooper, J. (Deptford)
Granville, E. (Eye)
Kinley, J.


Corbet, Mrs. F. K. (Peckham)
Greenwood, A. W. J. (Rossendale)
Kirkwood, Rt. Hon. D.


Cove, W. G.
Greenwood, Rt. Hn. Arthur (Wakefield)
Lang, Rev. G.


Craddock, George (Bradford, S.)
Grenfell, D. R.
Lee, F. (Newton)


Crawley, A.
Grey, C. F.
Lee, Miss J. (Cannock)



Griffiths, D. (Rother Valley)
Lever, L. M. (Ardwick)







Lever, N. H. (Cheetham)
Paling, Will T. (Dewsbury)
Taylor, R. J. (Morpeth)


Lewis, A. W. J. (West Ham, N.)
Pannell, T. C.
Thomas, D. E. (Aberdare)


Lewis, J. (Bolton, W.)
Pargiter, G. A.
Thomas, George (Cardiff)


Lipton, Lt.-Col. M.
Paton, J.
Thomas, I. O. (Wrekin)


Logan, D. G.
Pearson, A.
Thomas, I R. (Rhondda, W.)


Longden, F. (Small Heath)
Peart, T. F.
Thorneycroft, Harry (Clayton)


McAllister, G.
Poole, Cecil
Thurtle, Ernest


MacColl, J. E.
Popplewell, E.
Timmons, J.


McGhee, H. G.
Porter, G.
Tomlinson, Rt. Hon. G.


McInnes, J.
Price, M Philips (Gloucestershire, W.)
Tomney, F.


Mack, J. D
Proctor, W. T
Turner-Samuels, M


McKay, J. (Wallsend)
Pryde, D. J
Usborne, Henry


Mackay, R. W. G. (Reading, N.)
Pursey, Comdr H
Vernon, Mai. W. F.


McLeavy, F
Rankin, J.
Viant, S. P.


MacMillan, M. K. (Western Isles)
Rees, Mrs. D.
Wallace, H. W.


McNeil, Rt. Hon. H.
Reeves, J.
Watkins, T. E.


MacPherson, Malcolm (Stirling)
Reid, T. (Swindon)
Webb, Rt. Hon. M. (Bradford C.)


Mainwaring, W. H.
Reid, W. (Camlachie)
Weitzman, D.


Mallalieu, E. L. (Brigg)
Rhodes, H.
Wells, P. L. (Faversham)


Mallalieu, J. P. W. (Huddersfield, E.)
Richards, R.
Wells, W. T. (Walsall)


Mann, Mrs. J.
Robens, A.
West, D. G.


Manuel, A. C.
Roberts, Emrys (Merioneth)
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Marquand, Rt. Hon. H. A.
Roberts, Goronwy (Caernarvonshire)
White, Mrs. E. (E. Flint)


Mathers, Rt. Hon. George
Robertson, J. J. (Berwick)
White, H. (Derbyshire, N. E.)


Mellish, R. J.
Rogers, G. H. R. (Kensington, N.)
Whiteley, Rt. Hon. W.


Messer, F.
Ross, William (Kilmarnock)
Wigg, George


Middleton, Mrs. L.
Royle, C.
Wilcock, Group-Capt C. A. B.


Mikardo, Ian
Shackleton, E. A. A.
Wilkes, L.


Mitchison, G. R.
Shawcross, Rt. Hon. Sir H
Wilkins, W. A.


Moeran, E. W.
Shinwell, Rt. Hon. E.
Willey, F. T (Sunderland)


Monslow, W.
Shurmer, P. L. E.
Willey, O. G. (Cleveland)


Moody, A. S.
Silverman, J, (Erdington)
Williams, D. J. (Neath)


Morgan, Dr. H. B.
Silverman, S. S. (Nelson)
Williams, Ronald (Wigan)


Morley, R.
Simmons, C. J.
Williams, W. T. (Hammersmith, S.)


Morris, P. (Swansea, W.)
Slater, J.
Wilson, Rt. Hon. J. H. (Huyton)


Morrison, Rt. Hon. H. (Lewisham, S.)
Smith, Ellis (Stoke, S.)
Winterbottom, I. (Nottingham, C)


Mort, D. L.
Snow, J. W.
Winterbottom, R. E. (Brightside)


Moyle, A.
Sorensen, R. W.
Wise, Major F. J.


Mulley, F. W.
Soskice, Rt. Hon. Sir F.
Woodburn, Rt. Hon. A.


Murray, J. D.
Sparks, J. A.
Woods, Rev. G. S.


Nally, W.
Steele, T.
Wyatt, W. L.


Neal, H.
Stewart, Michael (Fulham, E.)
Yates, V. F.


Noel-Baker, Rt. Hon. P. J.
Strachey, Rt. Hon. J.
Younger, Hon. Kenneth


Oldfield, W. H.
Strauss, Rt. Hon. G. R. (Vauxhall)



Oliver, G. H
Stross, Dr. B.
TELLERS FOR THE NOES:


Orbach, M.
Summerskill, Rt. Hon. Edith
Mr. Bowden and


Padley, W. E
Sylvester, G. O.
Mr. Kenneth Robinson.


Paling, Rt. Hon. Wilfred (Dearne V'lly)
Taylor, H. B. (Mansfield)

New Clause.—(ESTATE DUTY ON DEPENDANT'S PENSIONS.)

The proviso to section four of the Finance Act, 1894 (which exempts from aggregation property in which the deceased never had an interest) shall be amended by the addition of the words, at the end:
Where the deceased has provided a life annuity for his widow, whether terminable or not on the event of her remarriage, or an annuity for the benefit of any person dependent on him for the period of dependency after his death, by virtue of the arrangements of a retirement benefits scheme to which he has contributed, the annuity shall be deemed to be property passing on the death of the deceased in which he never had an interest notwithstanding that the annuity so provided may be payable to the deceased during his life after the date of his retirement. For the purpose of this section a retirement benefit scheme shall have the same meaning as it has for the purpose of sections nineteen to twenty-three of the Finance Act, 1947."—[Mr. Maudling.]

Brought up, and read the First time.

Mr. Maudling: I beg to move, "That the Clause be read a Second time."

This Clause, again, relates to only a fairly small point, but I hope that on this occasion I shall find the Solicitor-General a little more in harmony with the point of view I am trying to put forward, on the matter of principle, at any rate, and that this time, if he makes some sort of concession, he will be able to come the whole way with me.

The intention of the Clause is to deal with what appears to be an anomaly that has arisen in the levying of Estate Duty upon dependants' pensions. In certain circumstances, when a man dies and leaves an annuity to his wife, the value of that annuity is aggregated with his estate for Death Duty purposes; in other circumstances, it is not aggregated. In one case it pays Estate Duty, and in another case it does not. It is entirely a matter of accident whether the duty is payable or not.

The distinction, as I understand it, is this Suppose that a man joins a pension fund


and wants to provide a pension of £200 a year for himself on retirement and £100 a year for his widow after his death. He can do it in one of two ways, either by providing himself with a pension, with a different and separate pension to follow to his wife, or he can provide himself with a pension which subsequently is transferred to his wife, perhaps at the lower rate.

The Committee will see that the distinction between those two methods, although valid in law, is meaningless in practice. But there is a very great difference, from the point of view of Death Duty, in which method is adopted. If the second method is adopted—if the man provides for himself a pension and that same pension subsequently is transferred to his wife—then the capital value of the wife's pension at the time of his death is aggregated with his estate. It therefore has to pay Estate Duty and also, if the estate is large enough, a higher rate of Estate Duty falls upon the rest of the man's estate.

If on the other hand, instead of arranging one pension for himself to be transferred subsequently to his wife, he had arranged for two separate pensions—first, one for himself, and then a contingent and separate pension, in which he never had any interest, for his wife—then that second pension would not be aggregated, and the Estate Duty which became payable would be very much less. The effect of this Clause would be that in neither case would the widow's pension be liable to be aggregated with the deceased's estate for the purposes of Estate Duty. But it is confined to pensions and annuities arising under a regular retirement benefit scheme.

The purpose of confining the Clause to pensions arising under a recognised scheme is because that is a branch of retirement provision over which the Income Tax authorities already have considerable control. The Inland Revenue exercise a large amount of control over retirement pension funds and retirement benefit schemes, and are therefore able to prevent any abuses. Because it is confined to schemes of that kind, and because no Estate Duty is payable on estates of less than £2,000, it seems to me that the sum involved in granting the concession asked for in this new Clause cannot be very large.

My argument is that the law has now reached a position where a man may make a provision for himself on retirement and subsequently for his wife or dependants in two different ways, which in practice are the same but in law are distinct, and it is entirely dependent on the accident of which method he chooses or which method is adopted by the pension fund of which he is a member as to the amount of Estate Duty likely to be levied on the widow's pension when he dies. In this new Clause I suggest that in neither case in future should the value of the widow's pension be aggregated for Estate Duty purposes. That would clear up an anomaly which exists—I understand that quite a number of examples are arising—and would do so with no substantial cost to the Exchequer.

The Solicitor-General: I agree with the hon. Member for Barnet (Mr. Maudling) that there is an apparent anomaly in this matter, that if one provides for two pensions one does not have to pay Estate Duty whereas if one provides for a pension payable to oneself, and, after one's death, to one's wife, it is aggregated. If the Clause were accepted as it stood, that is to say, if the pension, when it was payable to the husband and was not aggregated because of the £2,000 limit, there would be great scope for tax evasion. That is perfectly obvious.
Therefore, if we accepted any Clause of this kind in order to remove the anomaly it could not be in its present form, and there would have to be safeguards against the evasion which it would make possible. It is obvious to the Committee that with the £2,000 exemption, it would be quite easy, in various ways which it is not probably in the public interest to discuss in too much detail, to avoid having to pay Estate Duty. There is the point which the hon. Member has made that one does broadly the same thing by arranging for two pensions instead of one.
Even if the proposal in the Clause were accompanied by some anti-tax provision, I think that it is premature. As the Committee know, there is to be appointed a committee under the chairmanship of Mr. Millard Tucker, which is to investigate from the Income Tax point of view the question of the law with regard to pensions. The position of those who


enjoy pensions under pension schemes has to be considered, but it cannot be considered in isolation. Those who are self-employed, etc., and who cannot come within the pension schemes, must obviously be taken into account in any consideration of that sort. Although that Committee is to deal with the matter from the Income Tax point of view, its findings will no doubt have implications and repercussions upon the Estate Duty aspect.
Therefore, although I quite recognise that there is somewhat of an anomaly, that there is a problem which sooner or later will require to be dealt with, I propose to ask the Committee not to accept this Clause on the ground that it is premature and that it cannot be accepted as it stands for the reason I have given, namely, that it would be very easy to avoid tax if it were accepted. In any case, if one did try to include some kind of anti-evasion measure, it would be premature to accept the proposal before the Millard Tucker Committee has reported, so that the full implications, not only on Income Tax but also in regard to Estate Duty, can be considered.

Mr. Manningham-Buller: The Solicitor-General has made an interesting proposal. I am not quite clear from what he said whether this problem falls inside or outside the terms of reference of the Millard Tucker Committee. I rather gathered from what he said that as this matter related to liability to Estate Duty it did not really come within their terms of reference. On the other hand, there may be some doubt as to the precise sphere which those terms of reference cover. Do I understand that the right hon. and learned Gentleman is to write to the Committee and ask them to give special consideration to this anomaly? If that is done I feel sure that the Millard Tucker Committee would do their best to respond to the invitation. I feel sure also that if that is done it will go a long way towards satisfying my hon. Friend the Member for Barnet (Mr. Maudling).
I should also like to know whether the Millard Tucker Committee have begun their task. I suppose it is quite impossible to foretell when we shall see the fruits of their labours and such answer as they may give to this problem which

is now before us. The effect of the right hon. and learned Gentleman's answer depends to a large degree upon the answer to my question: can the Millard Tucker Committee give consideration to this question? If they can I think we should welcome their consideration of it and their views upon it.
But it really is not much good asking this Committee to pass from this question, to leave it open for what may be a considerable period, and then find that the Millard Tucker Committee have not considered it because they took the view that it was outside their terms of reference. To ask us to pass from consideration of this question with that possible result would not be satisfactory. I hope that the Solicitor-General will make it clear whether or not the Millard Tucker Committee can, or will be asked to, give special consideration to this anomaly.

Mr. Ellis Smith: There is some interest outside in the workings of the Millard Tucker Committee, and it would be helpful if we could be given some idea when their Report is expected.

The Solicitor-General: The Millard Tucker Committee—that is to say the new Committee which is to concern itself with pensions and, in particular, with pensions provisions—has not yet begun its work and of course, it is impossible to say when its Report will be to hand. I thought I made myself clear. I do not say that this matter of Estate Duty in its impact upon pensions is within the scope of terms of reference of that Committee. The Committee will deal with the matter from the Income Tax point of view. I was trying to say that when its recommendations with regard to the Income Tax aspect of this problem of pensions are to hand no doubt those recommendations will have their reflection upon the Estate Duty position. That is why I suggested that it was rather premature to accept a Clause upon this matter before it had been investigated by that Committee from the Income Tax point of view.
Apart from that, a fatal objection to this Clause, as I indicated, is that it does not contain any tax evasion provision. If the Clause were accepted in this form, it would be possible to evade Estate Duty on a fairly large scale.

8.30 p.m.

Mr. Manningham-Buller: The Solicitor-General said that we should have the advantage of the views of the Millard Tucker Committee on the Income Tax aspects and then we could make our reflections upon the Estate Duty aspects. Would it not be of great value to have the reflections of the Millard Tucker Committee on the Estate Duty aspects as well as on Income Tax? Could not they be asked to give consideration to that in relation to pensions? That would appear to be a very small increase in the field they would have to cover and, as the two are related to some extent, it would be much better for them to cover the whole of the field rather than just one part, leaving another part uncovered. That is why I asked the Solicitor-General a question to which he has not yet replied: Will he ask the Millard Tucker Committee to give consideration to this question concerning Estate Duty?

The Solicitor-General: The proposal is that it should deal with the Income Tax aspect, and that is a very large question in itself. To say that it would simply mean slightly adding to the burden of the Committee if they were asked to deal with Estate Duty aspect is incorrect. It would very largely increase the work of the Committee. If they are to deal with the Income Tax aspect, it would be a pity to start legislating on this matter, even though it is not strictly within their terms of reference, before the findings of that Committee are to hand. This matter depends upon the Act of 1894 which has been a workable provision for the last 56 years.

Mr. Maudling: I am a little disappointed that the Solicitor-General cannot accept this new Clause. It will be a long time before the Millard Tucker Committee produces their recommendations and, meantime, examples of this anomaly arise from time to time. I gather that the Solicitor-General agrees that there is an anomaly here, but I see the point about the possibility of evasion, certainly as the Clause is drafted. In those circumstances, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(DEDUCTION IN RESPECT OF BOARD AND LODGING OF NURSING STAFF.)

Rule 10 of Schedule E of the Income Tax Act, 1918, shall be amended so as to include as a deduction from the salaries of all nursing staff a sum in respect of board and lodging at a hospital, nursing home, hostel or other place at which such member of the nursing staff has necessarily to reside in the performance of his or her duties.—[Mr. Turton.]

Brought up, and read the First time.

Mr. Turton: I beg to move, "That the Clause be read a Second time."

This Clause is designed to deal with what I believe to be an anomaly in Income Tax law. Those nurses who live in hostels have deducted from their wages before they receive them a sum in respect of their hostel charges. They are assessed for Income Tax not on the net sum they receive but on their gross pay. I illustrate my argument by quoting details from a letter which I received on this subject, which says:
My daughter's May pay slip was as follows: gross wage, £16 13s. 4d., at the rate of £200 a year; less board £8 6s. 8d.; at the rate of £100 a year; less National Insurance £10s. 2d.; less subscriptions 14s. 2d.; less Income Tax 11s., on a wage of £200 a year.

For her month's work this nurse received £6 1s. 4d. I suggest that the nursing profession is not treated fairly in this respect. Apart from the fact that this young nurse is paid at the rate of only 30s. a week, it appears that she is being treated in an anomalous way. I raised this matter with the Chancellor of the Exchequer on 23rd May, and his reply was as follows:
I understand that the new scales of pay for nursing staff provide for payment of a gross wage, from which a deduction is made for board and lodging when it is provided by the employer. Income Tax is chargeable on the gross pay, and this new arrangement, far from being anomalous, puts nursing staff in the same position as the ordinary taxpayer who has to pay for his board and lodging out of income which has already borne tax."—[OFFICIAL REPORT, 23rd May, 1950; Vol. 475, c. 1853–4.]

While on that point, may I continue my quotation from the letter? My correspondent goes on to say:
I would point out that in the case of a shopkeeper employing his daughter at a wage of £2 a week and keeping her, the value of that keep is not added to the cash wages for Income Tax purposes.

He goes on:
You will be doing the nursing profession a great service if you could find time to pursue this matter fully.

I need not stop there. In the last Parliament, the Estimates Committee of the House of Commons examined the position of foreign workers who live in hostels—an entirely level case with that of nurses who live in hostels—when it was found—I quote from the evidence of a secretary of the Ministry of Agriculture—that foreign workers, as committee employees, get £4 14s., less 30s., and have Income Tax deducted on the net sum.

The Committee will recollect that the Estimates Committee of the House made a recommendation that the Treasury should investigate the whole position to see that those who lived in hostels were all treated in a similar manner. My new Clause merely asks the Committee to give the nursing profession the same justice as the Income Tax law at present gives to the foreign worker in agriculture. I want to say nothing against the foreign worker in agriculture, but I feel that the nursing profession has as great a claim on us in this Committee as have the European volunteer workers in the agricultural hostels. I think it only fair that they should be treated in a like manner.

May I remind the Committee and the Financial Secretary, who I believe is to reply, of the words of Rule 10 of Schedule E, which I am trying to expand to deal with the nursing profession. It says:
Where the Treasury are satisfied with respect to any class of persons in respect of any salary … payable out of the public revenue that such persons are obliged to lay out and expend money wholly, exclusively, and necessarily in the performance of the duties in respect of which such salary … is payable, the Treasury may fix such sum, as in their opinion represents a fair equivalent of the average annual amount laid out and expended … and in charging the tax on the said salary … there shall be deducted from the amount thereof the sum so fixed by the Treasury.

I should have thought that was clear authority that gave the Treasury power to deduct from the nursing profession those sums they had perforce to pay for their lodging in a hostel. Therefore, I have moved this new Clause in the hope that the Treasury will so expand Rule 10 that it will cover both cases in the same way. If the Financial Secretary will accept this new Clause, he will be doing

justice to a very honoured and very deserving profession.

Mr. Basil Nield: My purpose in intervening in this Debate is to support, as strongly as I can, the new Clause moved by my hon. Friend the Member for Thirsk and Malton (Mr. Turton) since it is designed to benefit this very splendid calling. My reasons for supporting it are that in recent times, in all quarters of this Committee, the highest tributes have been paid to the nursing profession. It has been recognised that they do work under conditions of very great difficulty when there is a shortage of staff involving long hours of work. Recruitment has been difficult, and it has also been recognised in all quarters of the Committee that the level of remuneration is scarcely adequate.
In these circumstances, the Committee probably will be quite united in their desire to provide some benefit, if it can be fitted into the present scheme of things. I congratulate my hon. Friend the Member for Thirsk and Malton upon finding a way of removing the type of anomaly which he has so clearly explained to the Committee. He has searched and found that under Rule 10 of Schedule E of the Income Tax Act, 1918, there is an opportunity to set right this wrong, as we conceive it to be.
As he has pointed out, the test there is whether persons are obliged to lay out and expend money wholly, exclusively, and necessarily in the performance of the duties in respect of which such salary is paid. As the new Clause is framed, these nurses would come within this category if the Clause were accepted. I think there will be great support in all quarters of the Committee for the new Clause, and I hope that the Government will accept it.

Mr. John Cooper: I hope this Clause will be rejected, because I do not think the hon. Member for Thirsk and Malton (Mr. Turton), who was being goaded on by good intentions, appreciates the greater anomalies this would create. I hope it is appreciated in this Committee that the standard of remuneration of nurses in the last few years has improved beyond all recognition, due mainly to the work of the Minister of Health. Many of us may feel the nurses are still not adequately paid; but there has been virtually a revolution in the wages, hours


of work and working conditions of nurses, due to the work of the Minister of Health.

Mr. Turton: Does the hon. Member consider that £6 1s. 4d. a month net received by a young nurse adequate remuneration?

Mr. Cooper: I want to come to that. There are many workers in this country, who, after having paid for their board and lodging and laundry, would be very happy to be left with £6 per month. That is a proper comparison to make. There are many other responsible workers who have to pay for their board in this country, apart from the hospital worker and the nurse.
8.45 p.m.
Let me quote one case in which an immediate difficulty would arise. Take the catering trade. Under the Catering Wages Board there are two sets of wages which are statutorily payable by the employer, set out side by side—one set for the worker who is not resident and who is not found accommodation, and the other set for the worker who is found accommodation. If this Clause went through it would mean that the person who is employed and lives in a hotel would pay less Income Tax than his colleague who happens to live outside the hotel, although actually they are both receiving in total the same aggregate remuneration.
I hope the hon. Member for Thirsk and Malton will accept my sincerity on this matter. For many years I have sat on wages boards dealing with the wages of hospital workers, and I admit that this is a problem, but the problem and the inequity which exists can only be based upon an unfair assessment of the value of the accommodation that is provided for the nurse. If that assessment is correct there is nothing to grumble about. If it is an unfair assessment there are joint wages bodies in this country which can alter it.
Let me point out the danger in this new Clause. Nurses in this country are entitled now to join and enjoy the benefits of superannuation schemes. If we are going to exclude the emolument value of their employment—that is, the value of board and lodgings—for the purpose of reducing their taxation liability, I say, as

one who has negotiated on the position from time to time, that we cannot avoid the logical sequel, namely, exclude the valuation for pensions and do quite a lot of harm to the nurse herself.
This problem is not quite so simple as it appears to be. One might feel that one would be doing a good thing for the nurse, but the same problem is involved in many other trades and one would be doing a lot of harm to the nurse by reducing the very real value of accommodation and so on which has a great bearing on her own pensionable position.

Mr. John Edwards: I would not have intervened, especially as this is the first time that I have spoken in the House since my absence, but for the fact that I was a good deal concerned with the changeover that took place some time ago in the methods by which nurses' salaries were paid. I say to the hon. Member for Thirsk and Malton (Mr. Turton) that however well intentioned he may be, it would be doing a great disservice to the nursing profession were this Clause adopted.
One of the things that stood in the way of nurses getting better remuneration was the old method of fixing some notional figure of emolument in respect of lodging and so on. With the co-operation of the associations concerned when I was Parliamentary Secretary to the Ministry of Health, I thought that we had done a very good thing indeed when we put the nurses very much on all fours with all other people. I am not talking about the pay of nurses as such; I am not arguing about whether the pay is high or low, but I am sure the nurses will do much better in their claims if they put them forward as pay claims rather than if they argue about this or that emolument.
I say to the hon. Member for Thirsk and Malton with all the good will in the world—and I hope that I did something, at any rate, to improve the conditions of service of nurses—that this is not the way to do it. In fact, if this Clause were accepted it would restore one of the greatest handicaps with which we had to deal before we could get nursing salaries on any proper basis.

The Financial Secretary to the Treasury (Mr. Douglas Jay): I am sure we all recognise the good intentions of the hon. Member for Thirsk and Malton (Mr. Turton) in putting this Clause forward, but I agree with my hon. Friends that if we were to adopt the course he suggests we should, in fact, provoke worse anomalies than those now existing, and worse anomalies not only as between nurses and other sections of the population but as between one group of nurses and another.
It was previously the case that some nurses were paid a straight salary whereas others were paid a lower salary and accommodation was provided for them in kind. In those circumstances Income Tax was charged in the one case on the higher money salary and in the other case on the lower money salary, because there was no other way of doing it. That, of course, was unfair as between one group of nurses and another because those receiving the lower salary plus accommodation paid less in Income Tax.
I understand that that system was altered partly in order to correct this very anomaly. For the great majority of nurses the same money income is now paid and for those who live in a deduction is made from the salary to represent the boarding and lodging expenses. The Income Tax can now, therefore, be charged on the same money income in each case, and that is surely much better as between one group of nurses and another.
If we were to adopt the hon. Member's suggestion we should surely revive the anomaly because those nurses who were living in would be able to claim a deduction for Income Tax in respect of their boarding and lodging expenses, whereas those who were not living in but who were receiving exactly the same total income would not be able to claim deductions and would, therefore, pay more Income Tax. Indeed, I think it would create injustice between the one class of nurses and other members of the community because, after all, all workers and indeed all of us have boarding and lodging expenses which cannot be counted as a deduction for Income Tax purposes.

Mr. Turton: But they can.

Mr. Jay: I think, therefore, that there is no real escape from the conclusion that the present is the fairest way of dealing with the problem. For those reasons I am afraid we cannot advise the Committee to accept the new Clause.

Mr. Turton: I have not heard the Financial Secretary deal with the anomaly which I mentioned to him—why European volunteer workers paid no Income Tax on hostel charges while nurses have to pay on their lodging expenses. That is an anomaly to which the Estimates Committees of the House directed his attention last August. I am surprised that he did not deal with it in his reply. If he wishes to deal with it now I shall readily give way to him and allow him to make a pronouncement upon it.
I have always realised that there were difficulties here which might create more anomalies and I am the last person to wish to create anomalies. I feel that this Clause has drawn attention to the fact that there is a great anomaly in the Income Tax treatment of nurses, on the one hand, and of European volunteer workers, on the other hand, and that it has also drawn attention to the fact that the net remuneration of many of these young nurses is quite inadequate at the present time. For that reason I feel that the Clause has served two very useful purposes. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause—(DISTRAINT UPON GOODS NOT BELONGING TO THE TAXPAYER.)

Subsection (1) of section one hundred and sixty-two of the Income Tax Act, 1918, shall have effect as if there were omitted therefrom the words "distrain upon the lands, tenements and premises in respect of which the tax is charged, or" and section one hundred and sixty-four of the said Act shall cease to have effect.—[Miss Ward.]

Brought up, and read the First time.

Miss Irene Ward: I beg to move, "That the Clause be read a Second time."
The purpose of this Clause is to amend a somewhat archaic law which in operation appears to chastise the innocent as well as the guilty. In moving it, I feel that even if it does not appeal to the Chancellor of the Exchequer as the Chancellor of the Exchequer, it might appeal


to him as a distinguished lawyer, who is, of course, concerned with having sound principles of law.
The incident which made the putting down of this new Clause essential may be fresh in the mind of the Committee. Earlier in the year a collector of taxes distrained on a certain business undertaking for non-payment of taxes, and in dealing with the property, as he was entitled to do, he decided to sell the goods which had been left there for dry cleaning. The business undertaking was a dry-cleaning one. The collector of taxes decided to put up to auction the clothing which was on the premises.
One of the customers who had left his clothes with the company happened to be passing, and called in to see if his clothes were ready for him to take home, and found the auction in process. He expostulated with the authorities to no avail, and being a gentleman with a sense of humour, I think, and of great restraint so far as his temper was concerned, he took part in the auction, and purchased his own clothes for the sum of £13 15s. I understand that this case has come to be known as the "trousers case," from which I gather that, in the course of purchase, he re-bought some of his own trousers.
When the matter was reported subsequently to the Chancellor of the Exchequer, he received a very polite letter of regret that the incident should have occurred, and in the letter was a phrase saying that the Chancellor hoped that all further difficulties would be avoided in the future. It is rather because of that phrase that I submit to the Committee that I hope I shall be able to persuade the Treasury to agree to this new Clause. Subsequently, the gentleman also received a cheque from the Inland Revenue for the sum of £13 15s., without prejudice. It seems to me, from a recital of that case, that the practical and obvious action which should be taken by the Chancellor is to put it without the power of the collector of taxes in future to distrain on goods which belong to a third party and which are not in any way involved in the action which is legitimately taken by the collector of taxes.
I am reinforced in putting forward this new Clause when I tell the Committee that no such power exists in Scotland.

Mr. Chetwynd: They do not wear trousers in Scotland.

Miss Ward: Well, they do wear kilts.

Mr. Chetwynd: They do not wear trousers in Scotland.

Miss Ward: I heard the hon. Gentleman. I know the Scots are always ready to defend the Scots. However, coming from the right side of the Border, I nevertheless on this occasion bow to the superiority of the law of Scotland, and I ask the Chancellor of the Exchequer whether he will accept at any rate the principle of the Clause, even if he is not prepared to accept its specific wording. As I think I have on this occasion put forward, on behalf of my hon. Friends and myself, a reasonable case, I hope that I may persuade the Chancellor of the Exchequer to accept the new Clause.

9.0 p.m.

Mr. Gerald Howard: As this is the first time that I have been privileged to address this House, I do so with considerable nervousness. I am emboldened by the knowledge of the traditional kindness of hon. Members upon these occasions, and by the belief that the proposal which has been put forward by my hon. Friend will meet with at any rate sympathy in all quarters of the Committee. The strange fact is that the law today relating to distress for arrears of Income Tax is in this situation: that to recover for arrears of Income Tax, Schedule D, the tax collector can only distrain upon the goods of the person who is in default of payment, but where the tax is a property tax levied upon the premises, Schedule A tax, as the law stands the tax collector can distrain upon any goods found upon the premises—as he did in the case to which my hon. Friend referred by taking, apparently, among other things, the nether garments of the unfortunate person who had sent his clothes to be cleaned.
It does not need much imagination to envisage innumerable cases of great injustice that could be perpetrated while the law remains as it is. Supposing one left one's car in a garage and the garage proprietor were in default in payment of his Schedule A tax, as the law stands the tax collector can distrain upon that innocent person's car in part satisfaction of the tax debt owed by the garage


proprietor. While it may be logical to say that there can be distraint for tax on premises on goods found upon those premises, those two illustrations are, I think, sufficient to show that the results of the law being in its present situation are iniquitous. Indeed, there will be within the recollection of the Solicitor-General cases before the war in which courts have given decisions upholding the proposition that there can be distraint upon the goods of an innocent third party in order to pay the tax of somebody else.
I notice that the gentleman in the example cited by my hon. Friend endeavoured, before he got redress from the Treasury, to obtain money from his insurance company, and they described the transaction in words which hon. Members may think not inappropriate. They said: "This is a legal theft. You can get no benefit. If it had been an illegal theft we could have paid you."
It is not, I think, without interest to look for a moment as an analogy at the law relating to distress by a landlord for rent, because the old common rule was just the same; the landlord could distrain upon any goods on the premises whether they belonged to the tenant or whether they did not. It was found, as will be readily appreciated, that that inflicted great hardships upon innocent persons, and the law was gradually altered by excepting, for example, such things as the tools of a person's trade, until finally, in 1908, the innocent third party whose goods might be seized was very largely protected by the passing of the Law of Distress Amendment Act.
It is not without interest to note that there was an exactly similar position with regard to landlord and tenant distress as now exists with regard to distress for arrears of tax incurred in respect of premises, and to read what the then Lord Chancellor said about that position while the Bill was before another place. He said:
The property of one man may be taken to pay the debt of another. This is very cruel indeed in operation; it is revolting, I venture to think, to all lovers of fair play.
That is exactly the position that exists and which we are endeavouring now to have remedied. The case which brought about that Act was one which was tried in 1907 and the judge referred to the position, which is the position as it exists today. The rule that the landlord is

entitled to distrain upon the property of a third party upon the premises has up to now escaped the zeal of legal reform. That was in 1907. This is 1950. So far, apparently, the same position with regard to distress for Income Tax has escaped the zeal of legal reform. All that we are asking the Government tonight is by some means or other—they are not tied to specific means—to remove something which we regard as inflicting a great injustice upon innocent parties.

The Solicitor-General: I am very happy that this proposal of the hon. Member for Tynemouth (Miss Irene Ward) gives me the opportunity of expressing my warm congratulations to a personal friend and colleague of the Bar upon his most admirable maiden speech in this House. I am quite certain that I voice the feelings of the whole Committee when I say that we shall all look forward in the future to hearing further speeches from him, particularly upon subjects of which he knows so very much, as he does upon this topic which the hon. Lady, I think rather unfortunately, characterised as the "trouser incident."
Much as I would like to accede to his argument and to hers, I cannot help thinking that they are really making a little too much of what was a single, isolated incident. The hon. Lady said that this was an archaic law. It is true that the Inland Revenue authorities have had this power for 150 years, and that so far as I know, and so far as I am informed, this trouser incident is the sole incident which has occasioned any difficulty. She asked my right hon. and learned Friend to accept the principle that this kind of incident should not be allowed to recur, and certainly my right hon. and learned Friend does accept it, and instructions have been given that this sort of thing is not to happen again.
If this enactment had given occasion on repeated occasions to difficulties of this sort, I would have advised the Committee to take the view that there was more in this proposal than there really is. Having regard, however, to the fact that this is the only incident that we can find for years back which has attracted adverse criticism, I suggest that it is quite enough to deal with it by administrative action, and it has been so dealt with. The necessary instructions have been issued


which it is profoundly hoped will avoid any recurrence of anything of this sort.
The matter does not stop there. It is true that in the case of assessment under Schedule D there is only power to destrain on goods of the debtor in respect of the tax; whereas in the case of Schedule A assessment, the Inland Revenue authorities can carry out a destraint upon the goods of other people. But the circumstances are quite different. A destraint under Schedule D is, broadly speaking, generally carried out at the premises of a debtor or something of that sort. If anyone destrained under Schedule A could avoid the effect of the destraint by saying that the goods in the house did not belong to him—they all belonged to his wife or nephew or someone else—it might mean that the distress would be rendered completely nugatory. I think that it is going very far to ask the Inland Revenue authorities to dispense with this power.
I can assure the Committee that it is a very necessary power, and that it has only on this one occasion led to trouble. The situation is rather different in Scotland. The sheriff carries out what they call in Scottish law "poinding," which is equivalent to distress in English law, although he is entitled to charge far higher costs. Therefore, the process is far more effective. For all these reasons, because this is a purely isolated instance which we have already dealt with by administrative action, and because I hope Members will agree that we should not

clutter up our Income Tax legislation with Clauses dealing with specific matters that are really not necessary, I hope the Clause can be withdrawn.

Miss Ward: I am very disappointed with the answer the Solicitor-General has given. He has told us that the Inland Revenue authorities have had this power for 150 years and that this is the first occasion it has been used. If they have had this power for all these years, it seems very odd that in what we like to regard as a progressive and enlightened age it should have been used.

The Solicitor-General: I think the hon. Lady has slightly misunderstood me. I said this was the only occasion in which trouble had arisen where distraint was carried out on goods deposited with a trader to carry out work on those goods. I did not say that this was the only occasion when the powers have been used to distrain on goods.

Miss Ward: That does not alter what I was trying to say. It is regrettable that in 1950 this trouble should have occurred for the first occasion. The argument of the Solicitor-General did not seem a particularly sound one, nor is it an argument that makes any great appeal to me. I prefer to know that the trouble cannot arise. Therefore, I am afraid we are not prepared to respond to the request to withdraw this Clause.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 274; Noes, 294.

Division No. 42.]
AYES
[9.15 p.m.


Aitken, W. T
Boyd-Carpenter, J. A.
Crosthwaite-Eyre, Col. O E


Alport, C. J. M.
Bracken, Rt. Hon. Brendan
Crouch, R. F.


Amery, J. (Preston, N.)
Braine, B.
Crowder, F. P. (Rulslip-Northwood)


Arbuthnot, John
Braithwaite, Lt.-Comdr. J G.
Crowder, Capt. John F. E. (Finchley)


Ashton, H. (Chelmsford)
Bromley-Davenport, Lt.-Col. W
Cundiff, F. W.


Astor, Hon. M
Brooke, H. (Hampstead)
Cuthbert, W. N.


Baker, P.
Browne, J. N. (Govan)
Darling, Sir W. Y. (Edinburgh, S.)


Baldock, J. M.
Buchan-Hepburn, P. G. T
Davidson, Viscountess


Baldwin, A. E.
Bullock, Capt. M.
Davies, Nigel (Epping)


Banks, Col. C
Bullus, Wing-Commander E. E
de Chair, S.


Baxter, A. B.
Burden, Squadron-Leader F. A.
De la Bère, R.


Beamish, Maj. T V. H
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
Deedes, W. F.


Bell, R. M.
Carr, L. R. (Mitcham)
Digby, S. Wingfield


Bennett, Sir P. (Edgbaston)
Carson, Hon. E.
Dodds-Parker, A. D


Bennett, R. F. B. (Gosport)
Channon, H
Donner, P. W.


Bennett, W. G. (Woodside)
Clarke, Col. R. S. (East Grinstead)
Douglas-Hamilton, Lord M


Bevins, J. R. (Liverpool, Toxteth)
Clarke, Brig. T. H. (Portsmouth, W.)
Drayson, G. B.


Birch, Nigel
Clyde, J. L.
Drewe, C.


Bishop, F. P.
Colegate, A.
Dugdale, Maj. Sir T. (Richmond)


Black, C. W.
Conant, Maj. R. J. E.
Duncan, Capt. J. A. L


Boles, Lt.-Col. D. C. (Wells)
Cooper, A. E. (Ilford, S.)
Dunglass, Lord


Boothby, R.
Cooper-Key, E. M.
Duthie, W. S.


Bossom, A. C.
Corbett, Lieut.-Col. U. (Ludlow)
Eccles, D. M.


Bowen, R.
Craddock, G. B. (Spelthorne)
Eden, Rt. Hon. A.


Bower, N.
Cross, Rt. Hon. Sir R.
Elliot, Lieut.-Col. Rt. Hon. Walter




Erroll, F. J.
Lloyd, Selwyn (Wirral)
Robson-Brown, W. (Esher)


Fisher, Nigel
Lockwood, Lt.-Col. J. C.
Rodgers, John (Sevenoaks)


Fletcher, W. (Bury)
Longden, G. J. M. (Herts, S. W.)
Roper, Sir H.


Fort, R.
Low, A. R. W.
Ropner, Col. L.


Foster, J. G.
Lucas, Major Sir J (Portsmouth S.)
Russell, R. S.


Fraser, Hon. H. C. P. (Stone)
Lucas, P. B. (Brentford)
Ryder, Capt. R. E. D


Fraser, Sir I. (Lonsdale)
Lucas-Tooth, Sir H.
Savory, Prof. D. L.


Galbraith, Cmdr. T. D. (Pollok)
Lyttelton, Rt. Hon O
Scott, Donald


Galbraith, T. G. D. (Hillhead)
McCallum, Maj. D.
Shepherd, W. S. (Cheadle)


Gammans, L. D.
McCorquodale, Rt. Hon. M. S.
Smiles, Lt.-Col. Sir W.


Garner-Evans, E. H. (Denbigh)
Macdonald, Sir P. (I. of Wight)
Smith, E. Martin (Grantham)


George, Lady M. Lloyd
Mackeson, Brig H. R
Smithers, Peter H. B. (Winchester)


Gomme-Duncan, Col. A.
McKibbin, A
Smithers, Sir W. (Orpington)


Gridley, Sir A.
McKie, J. H. (Galloway)
Smyth, Brig. J. G. (Norwood)


Grimston, Hon. J. (St. Albans)
Maclay, Hon J S
Snadden, W. McN


Grimston, R. V. (Westbury)
Maclean, F H. R.
Soames, Capt. C.


Harden, J. R. E.
MacLeod, Iain (Enfield, W.)
Spearman, A. C. M


Hare, Hon. J. H. (Woodbridge)
MacLeod, John (Ross and Cromarty)
Spence, H. P. (Aberdeenshire, W)


Harris, F. W. (Croydon, N.)
Macpherson, N. (Dumfries)
Spens, Sir P. (Kensington, S.)


Harris, R. R. (Heston)
Maitland, Comdr. J W
Stanley, Capt. Hon. R. (N. Fylde)


Harvey, Air-Codre A. V. (Macclesfield)
Manningham-Buller, R E
Stevens, G. P.


Harvey, I (Harrow, E.)
Marlowe, A. A H
Steward, W. A (Woolwich, W.)


Hay, John
Marples, A. E
Stoddart-Scott, Col. M


Heald, L. F.
Marshall, D (Bodmin)
Storey, S.


Heath, Col. E. R.
Marshall, S. H. (Sutton)
Strauss, Henry (Norwich, S.)


Henderson, John (Cathcart)
Maude, A. E U. (Ealing, S.)
Stuart, Rt. Hon. J. (Moray)


Hicks-Beach, Maj. W. W.
Maude, J C (Exeter)
Stud holme, H. G


Higgs, J M. C.
Maudling, R
Summers, G. S


Hill, Mrs E. (Wythenshawe)
Mellor, Sir J
Sutcliffe, H.


Hill, Dr. C. (Luton)
Molson, A. H. E
Taylor, C. S. (Eastbourne)


Hinchingbrooks, Viscount
Moore, Lt.-Col. Sir J
Taylor, W. J. (Bradford, N.)


Hirst, Geoffrey
Morrison, Maj. J. G. (Salisbury)
Teeling, William


Hogg, Hon. Q
Morrison, Rt. Hon. W S (Cirencestor)
Thomas, J. P. L. (Hereford)


Hollis, M. C.
Mott-Radclyffe, C E
Thompson, K. P. (Walton)


Holmes, Sir J. Stanley (Harwich)
Nabarro, G
Thompson, R. H. M. (Croydon, W.)


Hepkinson, H. L. D'A
Nicholls, H.
Thorneycroft, G. E. P. (Monmouth)


Hornsby-Smith, Miss P
Nicholson, G
Thornton-Kemsley, C. N.


Horsbrugh, Miss F.
Nield, B. (Chester)
Tilney, John


Howard, G. R. (St. Ives)
Noble, Comdr A H. P.
Touche, G. C


Hudson, Sir Austin (Lewisham, N.)
Nugent, G. R H
Turton, R. H.


Hudson, Rt. Hon. R. S. (Southport)
Nutting, Anthony
Tweedsmuir, Lady


Hudson, W. R. A. (Hull, N.)
Oakshott, H D
Vane, W. M. F.


Hulbert, Wing-Cdr. N. J.
Odey, G W
Vaughan-Morgan, J K


Hutchinson, Geoffrey (Ilford, N.)
O'Neill, Rt. Hon. Sir H.
Vosper, D F


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Ormsby-Gore, Hon. W D.
Wade, D W.


Hyde, H. M.
Orr, Capt L. P. S.
Wakefield, E. B. (Derbyshire, W.)


Hylton-Foster, H. B.
Orr-Ewing, Charles Ian (Hendon, N.)
Wakefield, Sir W. W. (St. Marylebone)


Jeffreys, General Sir G.
Orr-Ewing, Ian L. (Weston-super-Mare)
Walker-Smith, D. C


Jennings, R.
Osborne, C
Ward, Hon. G. R. (Worcester)


Johnson, Howard S. (Kemptown)
Perkins, W. R. D.
Waterhouse, Capt. C


Jones, A. (Hall Green)
Peto, Brig C H. M
Watt, Sir G. S. Harvie


Joynson-Hicks, Hon. L W
Pickthorn, K
Webbe, Sir H. (London)


Kaberry, D.
Pitman, I J
Wheatley, Major M. J. (Poole)


Keeling, E. H.
Powell, J Enoch
White, J. Baker (Canterbury)


Kerr, H. W. (Cambridge)
Prescott, Stanley
Williams, C. (Torquay)


Kingsmill, Lt.-Col. W. H
Price, H. A (Lewisham, W.)
Williams, Gerald (Tonbridge)


Lambert, Hon. G.
Prior-Palmer, Brig O
Williams, Sir H G (Croydon, E)


Lancaster, Col. C. G
Profumo, J. D
Wills, G.


Langford-Holt, J
Raikes, H. V.
Wilson, Geoffrey (Truro)


Law, Rt. Hon. R. K.
Rayner, Brig. R
Winterton, Rt. Hon. Earl


Leather, E. H. C.
Redmayne, M.
Wood, Hon. R


Legge-Bourke, Maj E. A. R.
Remnant, Hon. P
York, C.


Lindsay, Martin
Ronton, D L M
Young, Sir A. S. L.


Linstead, H. N
Roberts, Emrys (Merioneth)



Llewellyn, D.
Roberts, P. G. (Heeley)
TELLERS FOR THE AYES:


Lloyd, Rt. Hon. G (King's Norton)
Robertson, Sir D. (Caithness)
Miss Irene Ward and


Lloyd, Mai Guy (Renfrew, E.)
Robinson, J Roland (Blackpool, S.)
Mr. Gerald Howard.




NOES


Acland, Sir Richard
Beswick, F
Broughton, Dr. A. D. D.


Adams, Richard
Bevan, Rt. Hon. A. (Ebbw Vale)
Brown, George (Belper)


Albu, A. H
Bing, G. H. C.
Brown, T J (Ince)


Allen, A. C. (Bosworth)
Blackburn, A. R.
Burke, W. A.


Anderson, F. (Whitehaven)
Blenkinsop, A
Burton, Miss E


Attlee, Rt. Hon. C. R.
Boardman, H
Butler, H W. (Hackney, S.)


Awbery, S. S
Booth, A
Callaghan, James


Ayles, W. H.
Bottomley, A G
Carmichael, James


Bacon, Miss A
Bowden, H. W
Castle, Mrs. B. A


Baird, J
Bowles, F G. (Nuneaton)
Champion, A. J


Balfour, A.
Braddock, Mrs. E. M.
Chetwynd, G. R


Barnes, Rt. Hon A J
Brockway, A. Fenner
Clunie, J.


Bartley, P
Brook, D. (Halifax)
Cocks, F. S.


Bellenger, Rt. Hon. F. J
Brooks. T J (Normanton)
Coldrick, W.







Collick, P.
Hudson, J. H. (Ealing, N.)
Popplewell, E.


Collindridge, F.
Hughes, Emrys (S. Ayr)
Porter, G.


Cook, T. F.
Hughes, Hector (Aberdeen, N.)
Price, M. Philips (Gloucestershire, W.)


Cooper, G. (Middlesbrough, W.)
Hughes, Moelwyn (Islington, N.)
Proctor, W. T.


Cooper, J. (Deptford)
Hynd, H. (Accrington)
Pryde, D. J.


Corbet, Mrs. F. K. (Peckham)
Hynd, J. B. (Attercliffe)
Pursey, Comdr. H.


Cove, W. G.
Irvine, A. J. (Edge Hill)
Rankin, J.


Craddock, George (Bradford, S.)
Irving, W. J. (Wood Green)
Rees, Mrs. D.


Crawley, A.
Isaacs, Rt. Hon. G. A.
Reeves, J.


Cripps, Rt. Hon. Sir S.
Janner, B.
Reid, T. (Swindon)


Crosland, C. A. R.
Jay, D. P. T.
Reid, W (Camlachie)


Crossman, R. H. S.
Jeger, G. (Goole)
Rhodes, H


Cullen, Mrs. A.
Jeger, Dr. S. W. (St. Pancras, S.)
Richards, R


Daggar, G.
Jenkins, R. H.
Robens, A.


Daines, P.
Johnson, James (Rugby)
Roberts, Goronwy (Caernarvonshire)


Darling, G. (Hillsboro')
Johnston, Douglas (Paisley)
Robertson, J. J. (Berwick)


Davies, A. Edward (Stoke, N.)
Jones, D. T. (Hartlepool)
Robinson, Kenneth (St. Pancras, N.)


Davies, Ernest (Enfield, E.)
Jones, Frederick Elwyn (West Ham, S.)
Rogers, G. H. R. (Kensington, N.)


Davies, Harold (Leek)
Jones, Jack (Rotherham)
Ross, William (Kilmarnock)


Davies, R. J. (Westhoughton)
Jones, William Elwyn (Conway)
Royle, C.


Davies, S. O. (Merthyr)
Keenan, W.
Shackleton, E. A. A.


de Freitas, Geoffrey
Kenyon, C.
Shawcross, Rt. Hon. Sir H.


Deer, G.
Key, Rt Hon. C. W
Shinwell, Rt. Hon. E.


Delargy, H J.
King, H. M.
Shurmer, P. L. E.


Dodds, N. N.
Kinley, J.
Silverman, J. (Erdington)


Donnelly, D.
Kirkwood, Rt. Hon. D.
Silverman, S. S. (Nelson)


Donovan, T. N.
Lang, Rev. G.
Simmons, C. J.


Driberg, T. E. N.
Lee, F. (Newton)
Slater, J.


Dugdale, Rt. Hon. J. (W. Bromwich)
Lee, Miss J. (Cannock)
Smith, Ellis (Stoke, S.)


Dye, S.
Lever, L. M. (Ardwick)
Snow, J. W.


Ede, Rt. Hon. J. C.
Lever, N. H. (Cheetham)
Sorensen, R. W.


Edelman, M.
Lewis, A W. J. (West Ham, N.)
Soskice, Rt. Hon. Sir F.


Edwards, John (Brighouse)
Lewis, J. (Bolton, W.)
Steele, T.


Edwards, Rt. Hon. N. (Caerphilly)
Lipton, Lt.-Col. M.
Stewart, Michael (Fulham, E.)


Edwards, W. J. (Stepney)
Logan, D. G.
Strachey, Rt. Hon. J.


Evans, Albert (Islington, S. W.)
Longden, F. (Small Heath)
Strauss, Rt. Hon. G R. (Vauxhall)


Evans, E. (Lowestoft)
McAllister, G.
Stross, Dr. B.


Evans, S. N. (Wednesbury)
MacColl, J. E.
Summerskill, Rt. Hon. Edith


Ewart, R.
McGhee, H. G.
Sylvester, G. O.


Fernyhough, E.
McInnes, J.
Taylor, H. B. (Mansfield)


Field, Capt. W. J.
Mack, J. D.
Taylor, R. J. (Morpeth)


Finch, H. J.
McKay, J. (Wallsend)
Thomas, D. E. (Aberdare)


Fletcher, E. G. M. (Islington, E.)
Mackay, R. W. G. (Reading, N.)
Thomas, George (Cardiff)


Follick, M.
McLeavy, F.
Thomas, I. O. (Wrekin)


Forman, J. C.
MacMillan, M. K. (Western Isles)
Thomas, I R. (Rhondda, W.)


Fraser, T. (Hamilton)
McNeil, Rt. Hon. H.
Thorneycroft, Harry (Clayton)


Freeman, J. (Watford)
MacPherson, Malcolm (Stirling)
Thurtle, Ernest


Freeman, Peter (Newport)
Mainwaring, W. H.
Timmons, J.


Gaitskell, Rt. Hon. H. T. N.
Mallalieu, E. L. (Brigg)
Tomlinson, Rt. Hon G


Ganley, Mrs. C. S.
Mallalieu, J. P. W. (Huddersfield, E.)
Tomney, F.


Gibson, C. W.
Mann, Mrs. J.
Turner-Samuels, M.


Gilzean, A.
Manuel, A. C.
Usborne, Henry


Glanville, J. E. (Consett)
Marquand, Rt. Hon. H. A
Vernon, Maj. W. F.


Gooch, E. G.
Mathers, Rt. Hon. George
Viant, S. P.


Gordon, Walker, Rt. Hon. P. C.
Mellish, R. J.
Wallace, H. W.


Greenwood, A. W. J. (Rossendale)
Messer, F.
Watkins, T. E.


Greenwood, Rt. Hn. Arthur (Wakefield)
Middleton, Mrs. L.
Webb, Rt. Hon. M. (Bradford, C.)


Grenfell, D. R.
Mikardo, Ian
Weitzman, D.


Grey, C. F.
Mitchison, G. R.
Wells, P. L. (Faversham)


Griffiths, D. (Rother Valley)
Moeran, E. W.
Wells, W. T. (Walsall)


Griffiths, Rt. Hon. J. (Llanelly)
Monslow, W.
West, D. G.


Griffiths, W. D. (Exchange)
Moody, A. S.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Grimond, J.
Morgan, Dr. H. B.
White, Mrs. E. (E. Flint)


Gunter, R. J.
Morley, R.
White, H. (Derbyshire, N. E.)


Hale, J. (Rochdale)
Morris, P. (Swansea, W.)
Whiteley, Rt. Hon. W.


Hale, Leslie (Oldham, W.)
Morrison, Rt. Hon. H. (Lewisham, S.)
Wigg, George


Hall, J. (Gateshead, W.)
Mort, D. L.
Wilcock, Group-Capt. C. A. B.


Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
Moyle, A.
Wilkes, L.


Hamilton, W. W.
Mulley, F. W.
Wilkins, W. A.


Hannan, W.
Murray, J. D.
Willey, F. T. (Sunderland)


Hardman, D. R.
Nally, W.
Willey, O. G. (Cleveland)


Hardy, E A.
Neal, H.
Williams, D. J. (Neath)


Hargreaves, A
Noel-Baker, Rt. Hon. P. J.
Williams, Ronald (Wigan)


Harrison, J.
Oldfield, W H.
Williams, W. T. (Hammersmith, S.)


Hastings, Dr. Somerville
Oliver, G. H.
Wilson, Rt. Hon. J. H. (Huyton)


Hayman, F. H.
Orbach, M.
Winterbottom, I. (Nottingham, C.)


Henderson, Rt. Hon. A. (Rowley Regis)
Padley, W. E.
Winterbottom, R. E. (Brightside)


Herbison, Miss M.
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Wise, Major F. J.


Hewitson, Capt. M.
Paling, Will T. (Dewsbury)
Woods, Rev. G. S.


Hobson, C. R.
Pannell, T. C.
Wyatt, W L.


Holman, P.
Pargiter, G. A.
Yates, V. F.


Holmes, H. E. (Hemsworth)
Parker, J.
Younger, Hon. Kenneth


Houghton, Douglas
Paton, J.



Hoy, J.
Peart, T. F.
TELLERS FOR THE NOES:


Hubbard, T.
Poole, Cecil
Mr. Pearson and Mr. Sparks.

New Clause.—(AMENDMENT OF S. 28 (3) OF FINANCE ACT, 1949.)

Subsection (3) of section twenty-eight of the Finance Act, 1949, shall be amended by adding, at the end, the following proviso:—
Provided that where a person in possession of land or chattels so settled surrenders, assures, divests himself of or otherwise disposes of his interest therein or in any part thereof for the remainder of his life to or for the benefit of the persons successively entitled to the possession of such lands or chattels in remainder or reversion expectant on his death such lands or chattels or the part thereof (as the case may be) shall not for the purposes of those enactments be deemed to pass on his death—

(a) if the relevant surrender assurance divesting or disposition was bona fide made or effected five years before his death; and
(b) if bona fide possession and enjoyment of the lands or chattels or the part thereof (as the case may be) in which his interest subsisted was assumed immediately thereafter by the persons successively entitled to the possession thereof in remainder or reversion expectant on his death and thenceforward retained to the entire exclusion of the persons who had the possession thereof and of any benefit to him by contract or otherwise."—[Sir H. Lucas-Tooth.]

Brought up, and read the First time.

Sir Hugh Lucas-Tooth: I beg to move, "That the Clause be read a Second time."
This is rather a technical Clause and it does not concern a very large number of people, though perhaps rather more than the one person apparently affected by the last Clause. It concerns those estates which are generally known as Parliamentary estates, that is to say, property which was settled by Act of Parliament or by Royal grant, to quote the words of last year's Finance Act, so that:
No one of the persons successively in possession thereof is capable of alienating the same.
These estates usually took the form of a gift of land, and sometimes chattels, given by the nation to great public figures, great soldiers, sailors and statesmen. Many of them date back to our distant history, though some, of course, date only from the beginning of the last century when the practice ceased. These gifts created what is in effect an unbarrable entail. The property was given usually to the person himself whom Parliament wished to honour and then to the heirs of the title which was usually bestowed

upon him, and as these entails were unbarrable and as the person entitled to the enjoyment of the estate could not part with it in any way, special provision had to be made when our present law of Estate Duty was introduced under the Finance Act, 1894.
There were two privileges which were accorded then to the person in possession of these estates. In the first place, when a person in possession died, it was only the value of the interest taken by his successor which was taken for the purpose of Estate Duty. In the second place, even that value was not aggregated with the rest of his property but was treated as a separate estate. Under Section 28 (3) of the Finance Act last year, these privileges were abolished. The intention of the Government was no doubt to put these estates on the same footing as other classes of property. I think I am right in saying that no dissent from that course was shown in any part of the House. However, it now appears that the intention of the Government and, indeed, of the House may not have been carried out by the Section then passed.
9.30 p.m.
In the case of an ordinary tenant for life of property, he can get rid of his obligation to pay Estate Duty in a simple way by getting rid of the property in respect of which the duty may be payable. It is true, of course, that he may have to survive a certain number of years, but if he survives for five years after parting with all interest in the property, he is no longer liable to pay duty. It is quite otherwise with these people. They can part with the income and the physical enjoyment of the property which has been settled on them, but even if they succeed in getting rid of that there is at least a doubt whether or not they have so parted with their interest as to free them from the burden of Estate Duty in respect of this property when they come to die. I do not wish to suggest that is necessarily so, but that is the probable effect of the Act of last year, and of course doubt in this matter is of great importance to those concerned, because they wish to deal with their property in the meantime, and until they know what is the position they are unable to do so.
Grave hardship may result in individual cases. It may well be that a person who


is in possession or one of these Parliamentary estates has small other means of his own. If he has more than one child, or any child who is not a son, the result will be that he is virtually precluded from making any provision for such children. The result of the passing of the Act of last year means that he cannot get rid of that property. It has all to pass to a single person who may be his eldest son or, indeed, a distant cousin. Estate Duty will have to be paid on this substantial estate on his death even though he has parted with all property in it, and there will be virtually nothing left for his own children.
That is an anomaly and a hardship which I do not think anyone on either side of the Committee contemplates. My own view is that it is high time these old unbearable estates were abolished. I do not know whether that view would be held generally throughout the Committee, but I regard them as being something of an anomaly. I do not think the Finance Bill is the right place to abolish them, but there are difficulties which exist in this connection and I am not sure that they have been considered by the Government.
What is to happen when Estate Duty at the full rate falls on one of these estates when there is no power to sell the property contained in the settlement made by the Act? No such power was given by the Finance Act last year, and real difficulties will arise in that connection. The specific point is not raised in this new Clause, but I mention it to show the kind of difficulty which will arise if the Section I am seeking to amend is not amended fairly substantially in some way.
As a direct result of last years' legislation, those in possession of these estates are put in the awkward position that whereas an ordinary tenant for life has been able probably throughout his life, or at any rate since inheriting the estate, to make some provision for his children, and to hand over the estate to his son if he wishes to do so, these people have been prevented from doing it. So even if this Clause is carried, it will be necessary for them to wait five years before they can take advantage of the law which has been open to every other one of His Majesty's subjects. I do not seek to put that right by this Clause, although it is a matter which should be borne in mind. If the

Government will indicate that they view sympathetically what I am proposing, it is right that I mention this so that it should be considered at the same time.
The purpose of the Clause is to enable those who are in possession of estates of this kind to deal with them as nearly as possible in the same way as other individuals. That was the intention of Parliament when the original Section was passed and I hope that the Government can see their way to accept this proposal.

The Solicitor-General: I think that the point which the hon. Member has made is well-founded. It was hoped that it would be dealt with by Section 43 (2) of the Finance Act, 1940, but the question has been further investigated and it is found that that Section does not do so. I hope that the hon. Member will ask the leave of the Committee to withdraw his new Clause upon my undertaking that a new Clause with slightly different wording—the present wording, we think, is not altogether satisfactory—will be put down between now and the Report stage.

Sir H. Lucas-Tooth: Before asking the leave of the Committee to withdraw the Motion, may I ask whether such a new Clause as the right hon. and learned Gentleman suggests could be put upon the Order Paper as soon as possible before the Report stage so that an opportunity may be given to consider this extremely technical matter? I do not wish to appear ungrateful for what the Solicitor-General has said but it would be convenient if some reasonable length of time were given to considering this matter.

The Solicitor-General: It will appear in the ordinary way when the Bill is reprinted.

Sir H. Lucas-Tooth: I am grateful to the Solicitor-General, and I hope that he will take the action which I have suggested. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(REDUCTION OF ENTERTAINMENTS DUTY FOR BRITISH FILMS.)

(1) Where an entertainment held after the fifth day of August, nineteen hundred and fifty consists wholly or partly of the exhibition of a cinematograph film, being a film registered as a British film, then the entertainments duty chargeable in the case of any payment for admission to the entertainment shall be subject


to whichever of the following deductions is appropriate in that case:—

(a) if the entertainment includes as a first feature film the showing of a film registered as a British long film one-half of the duty chargeable at the full rate;
(b) if the entertainment includes the showing but not as a first feature film of a British long film or includes the showing of a film registered as a British short film such proportion of the duty chargeable at the full rate as may be prescribed in respect of the long film or the short film (as the case may be);
(c) if the entertainment includes the showing of more than one film registered as British films whether they be long films or short films the aggregate of the proportions of the duty which are to be deducted under paragraphs (a) and (b) of this subsection.

(2) The amount of entertainment duty remitted under the provisions of subsection (1) of this section shall be divided between the maker and the exhibitor of the films in respect of which the deductions are made in such proportions as may from time to time be laid down in regulations made by the Treasury.

(3) In this section the following expressions have the following meanings respectively:
full rate" and "prescribed" have the same meanings as in section eleven of this Act;
maker" and "exhibitor" have the same meanings as in the Cinematograph Films Act, 1938;
registered" means registered under the Cinematograph Films Act, 1938.—[Mr. Shepherd.]

Brought up, and read the First time.

Mr. Shepherd: I beg to move, "That the Clause be read a Second time."
It was considered likely that there would be a long discussion upon this Clause but, as hon. Members will have seen from the Press, certain negotiations have been taking place during the past few days which may make it possible for the Clause to be dealt in a shorter time than was originally intended. I hope that those negotiations which are taking place will come to a successful conclusion, and furthermore, that what the Government are intending to do will be adequate to meet the needs of the film industry. I hope that when the issue is raised finally the House of Commons will look very carefully at the proposals which are submitted, because nothing could be worse from the point of view of the industry or the country than that we should have some halfway measure which not only would not get us out of the present difficulty but as a result of which we should

find ourselves in a short time back in almost the same position.
Those of us who take an interest in the film industry did not expect to have to put this new Clause on the Order Paper because we thought that the Government would have been forced by the sheer pressure of events and by logic to do something before now. This industry—

The Chancellor of the Exchequer (Sir Stafford Cripps): I am sure that in view of the negotiations which are taking place the hon. Member will appreciate that it would be wiser to say as little as possible about this matter at the moment. There are, of course, people in other continents besides our own who are concerned in these negotiations. We are very anxious that nothing should be done to upset the negotiations, which at present appear very favourable, and it looks as if we might be able to come to an agreement very shortly. It would be a great help if we did not discuss this too long tonight.

Mr. Shepherd: I accept the point which the right hon. and learned Gentleman has made, but at the same time it will not weaken our case in other quarters if the whole country, the House of Commons and other people are aware of the extremely difficult position in which the industry finds itself by virtue of the intolerable burden of taxation. Whilst I do not wish to make a long speech, and while I have the anxiety of every hon. Member to get out of this place as quickly as possible—

Hon. Members: No.

Mr. Bracken: Shepherds sleep by night.

Mr. Shepherd: —I think it is fitting that the Committee should learn something of the intolerable burden which the Government have put upon this industry which has resulted in its getting into its present plight.
What is the position of the film industry as far as taxation is concerned? In 1938 the burden of taxation was £5 million. By 1949 it had risen to £38 million. I suggest that is a burden which the industry could not possibly bear. The British film industry has to compete against great difficulties. It has to compete with the Americans who have a big market which we have not got, yet we have a taxation which is twice the level


of American taxation. In the circumstances I do not wish to make a long speech, because we do not want in any way to prejudice the negotiations which are taking place.

Sir S. Cripps: As I have already indicated, I am certainly not in a position to say anything on this Clause at the moment. It would be wrong, in the circumstances, for me to say anything. I could bring forward all sorts of arguments, but I do not think that they would help towards what we want to get, which is the conclusion of a satisfactory arrangement. Therefore, I hope that the hon. Gentleman, having made his point, will be able to withdraw his new Clause

Earl Winterton: It is, I think, not improper to say that the Chancellor, myself and my hon. Friend the Member for Cheadle (Mr. Shepherd) have had some private discussion about this matter. My hon. Friend and I are privy to the discussions that have taken place because, although we are not great popular figures like the Chancellor of the Exchequer, Seretse Khama or the hon. Member for Orpington (Sir W. Smithers), we do have some slight influence in the cinema world. Perhaps I ought to say in parenthesis that I should disclose, not for the first time, that I have a personal interest in this matter. I have never quite been able to understand what is the purpose of the disclosure of personal interest, because everyone has a personal interest in almost every aspect of the Finance Bill. But, as hon. Gentlemen opposite are always very pleased to raise points of order where I am concerned, perhaps someone would like to get up and ask whether the noble Lord should speak on a question in which he is interested.
It is no use the Chancellor waving his hand at me. I will sit down in a moment, in any case. In all seriousness, I should only like to support what my hon. Friend has said and to point out that there is a very grave question at issue here. I should like to say to the Chancellor that we hope that the discussions to which he has referred will reach a fruitful conclusion and that he will be in a position to make an announcement on Thursday of next week when we have the Films Debate. In the circumstances, with the

greatest possible humility, I beg to ask my hon. Friend to withdraw this new Clause.

Mr. Shepherd: I beg to ask leave to withdraw the Motion.

Mr. Maclay: I apologise with the utmost sincerity for inflicting myself on the Committee, but there is a great difficulty. Later on the Order Paper there is a new Clause relating to Duty on cinema entertainments, in the name of the hon. Member for Caithness and Sutherland (Sir D. Robertson) and other hon. Members which I had heard rumoured might not be called. I wish to ask whether the appeal I heard from the Chancellor, and the pressure put upon me in the last few moments to sit down, means that what the Chancellor implies might also go a considerable distance towards covering the substance of the new Clause in the name of my hon. Friend the Member for Caithness and Sutherland. If I can take it that that is so, I will certainly not inflict myself on the Committee any longer.

Question put, and negatived.

New Clause.—(EXPORT ALLOWANCE.)

(1) This section shall apply to profits tax chargeable in respect of any trade or business where any part of the trading receipts of the chargeable accounting period are from the United States of America or Canada, or from any country which, at the beginning of the chargeable accounting period in question imposed no restriction upon the conversion of its currency into United States dollars for current transactions.
(2) (a) The year 1949 shall be the standard year, and the total receipts from a trade or business for that year shall be the standard receipts;
(b) the total receipts from a trade or business arising from a country referred to in subsection (1) of this section shall be the dollar receipts for the purpose of this section.
(3) There shall be deducted in ascertaining profits for profits tax purposes an export allowance being that proportion of those profits which is equivalent to the proportion which the excess of the dollar receipts of the chargeable accounting period over the dollar receipts of the standard year bears to the total receipts from the trade or business of the chargeable accounting period.
(4) Where a chargeable accounting period is longer or shorter than a year, an increase or decrease shall be made for the purposes of this section, in the amount of the total receipts of the trade or business for that year, and the dollar receipts for that year in the proportion which the chargeable accounting period in question bears to one year.


(5) This section shall apply to any chargeable accounting period or part of any chargeable accounting period commencing on the first day of January, nineteen hundred and fifty, and such apportionment shall be made of the profits and receipts for a chargeable accounting period as may be necessary accordingly.—[Mr. Aitken.]

Brought up, and read the First time.

9.45 p.m.

Mr. W. T. Aitken: I beg to move, "That the Clause be read a Second time."
I ask the indulgence of the Committee on this the very first occasion on which I have the honour of addressing it. That indulgence may be necessary because I have no expert knowledge of taxation or public finance, and the only reason I put my name to this new Clause, which was on the Order Paper in the name of my hon. Friend the Member for Epping (Mr. Nigel Davies), is because I have had some experience of the difficulties and problems which business men encounter from time to time in the North American market—difficulties regarding goods and services in that very difficult and exhilarating market.
It seems to me that the whole purpose and idea behind this Clause is to provide the kind of incentive which stresses the vital need to encourage those small and large business men who have not yet made any attempt to enter the North American market. Indeed, it is most important that a far greater variety of goods should be sold in the American market, and in a far greater variety of territories, than are being sold there at the present time. The reasons for this are quite clear to anyone who is aware of the very wide divergence between the wise and far-seeing import policies of the American and Canadian Governments and the views held by certain manufacturing concerns who are taking what I may term a rather short-view in the interest of their own products.
Although the American tariffs are frequently mentioned as a major difficulty of exporters to the North American Continent, they are not the major difficulty. The major difficulty is the multiplicity of administrative formalities and Customs procedures, State regulations, trade association practices, and various other matters which make it exceedingly difficult for the exporter to conform with the requirements of the American market.

Hon. Members will remember that in 1930, when these tariffs were first introduced, the Americans were far less concerned about the height of the tariff wall than about the various other regulations which protected them from what they considered to be undue competition. These are the expensive and complicated difficulties which exporters have to face up to.
I should like to give the Committee an example of a very enterprising industry in, my own constituency where a seed merchant is this year exporting to America half a million dollars worth of seeds-There are no tariff difficulties whatever to speak of, but when those seeds enter American territory, they must be stained a certain colour. That gives the American seed industry an opportunity, if they so desire, to discriminate in various ways against that particular import.
If we look at the figures of the exports which we send to America, we find that the vast bulk of them can be listed under eight or nine headings. Most of them are sold in the Eastern Atlantic States—East of the Mississippi and North of the Potomac—for it so happens that they are the easiest markets; they are the richest and most populous part of the United States. One of the troubles is that this drive to increase the traditional exports has resulted in a good deal of fear and despondency among the American competitors of these particular imports.
It will be found that all the devices they are so well accustomed to use against what they consider to be undue competition are now beginning to have some influence on the increased exports to those particular parts. It will be found that the bulk of the sales of English woollen textiles are in the Eastern, New England States of America. Also concentrated in those areas are the bulk of the American textile industry, so it is small wonder that these industries are beginning to use the sort of devices which they are entitled to use against what they consider to be undue competition. The American market is comparable only to the American territory in its vastness. This 200,000 million dollar market is something which we cannot help but realise offers glorious opportunities to the British export industry. I need not remind hon. Members what even 1 per cent. would mean to Britain and the Commonwealth.
It is strange that, in spite of the many excellent devices which are available to the British exporter at the present time, we are not in a position to do a great deal better in the variety and multiplicity of exports to the American market. When one thinks of the work of the Dollar Exports Board, the British Export Trade Research Association and other Government bodies, and the undoubted assistance they provide to industry, it seems peculiar that there has not been a much greater drive in the whole area rather than in certain areas. Devaluation has brought many lines of British goods into the competitive price range for the first time in our trading history. The stock of good will towards British goods is an extremely valuable, though perhaps a somewhat intangible, asset at the present time. With all these advantages, if our traders cannot take advantage of the market as it stands at present, they never will.
The misgivings which so many industries feel towards the effort required to enter this market are quite understandable in many ways. The rewards are very small and the risks are very great. The Dollar Exports Board and other organisations have done a fine job. It is quite clear that risk and expenses are involved in tackling this very stimulating and great challenge to our industrial entrepreneurs. British industry, with the highest burden of taxation of any industry in the world, cannot afford to tackle the immense cost of embarking upon a campaign in this highly competitive market. It is no denigration of British industry to say that if we had to face here the competitive conditions which prevail in America, half the industries in this country would go out of business.
I do not believe that the art of American salesmanship is an occult art. I do not believe that the ordinary British businessman cannot master the technique of selling to the Americans. I do not believe that the traditional British skills and quality of workmanship are in any way inferior to the American. The trouble is that we cannot afford the cost, whatever is done in the way of export guarantees and other facilities. The real burden of cost to industry in embarking on this adventure must fall on the balance sheets of the companies concerned.
Let me say here that I shall be able to contain my astonishment if the right hon. Gentleman tells me that this Clause is impracticable and opens up all kinds of opportunities for the wicked. I will believe him when he tells me that, and I will also believe that it may be against certain principles of taxation. All those things I will accept if he tells me so. But what I will not accept is the argument that we must not try something new, that we must not be prepared to adopt special incentives to help and encourage the British exporter to North America. If we are prepared to try anything we can achieve anything. There may be all sorts of other devices which could be used, although, Major Milner, you would probably tell me that I was out of order if I were to discuss them now. Perhaps at another time we shall have an opportunity of discussing other kinds of incentives.
What we would like to hear is something about the Government's attitude to incentives to exporters to the North American continent. If we do not hear anything about these new ideas and devices, I am afraid that we shall just have to put it down to the reactionary conservatism of the Socialist Chancellor of the Exchequer. My hon. Friend who was to have moved this new Clause was not here to do so, but I am sure that he will be quite prepared to take on all comers on the question of the technical details of this Clause. As a maiden speaker, I have found myself in a somewhat embarrassing position in having to move it.

Mr. Gaitskell: It is with very real pleasure that I congratulate the hon. Member for Bury St. Edmunds (Mr. Aitken) on a most excellent maiden speech. I think we all know his very gallant war record. We have not previously had the pleasure of hearing him, but I am sure that we were all impressed with the knowledge and thought that he had clearly put into his speech and the experience which lies behind it, and we hope very much that we shall have the opportunity of hearing him on this and other subjects on many future occasions.
With the intention behind this Clause I am entirely in agreement, and I think it is an excellent thing that we should take this opportunity of discussing a matter that is obviously of first-class importance to all of us, namely possible methods of stimulating dollar exports


But I am bound to tell the hon. Member that there are several major obstacles to the proposals which he has put forward. I wish there were not, and I can assure him at the outset that we have given a great deal of thought to all sorts of possible methods of providing additional incentives to dollar exporters, but, as I say, this particular scheme really runs up against some pretty difficult hurdles.
10.0 p.m.
This is the first and, I think, the major difficulty, as with almost all such schemes. The proposal is that the relief from tax shall be based on the increase in dollar exports as compared with the base year of 1949. Precisely for that reason it means, in effect, that those firms which in 1949 had already achieved a very large measure of success in expanding their exports will be penalised relative to those who had not bothered at all before 1949.
I think there would be a good deal of resentment on the part of those firms which had been trying hard in 1946, 1947 and 1948 to expand their sales responding to calls from the Government and from this House to do their best to help to close the dollar gap. There would be a good deal of resentment if they found that, as a result of this kind of change, some firms which had really not bothered at all about dollar exports were to be specially relieved from taxation.

Mr. Frederic Harris: The Minister's suggestion is that certain firms may not have bothered to expand their sales. That is a very unfair reflecttion on certain manufacturers who often have been unable to obtain exports for many reasons. It is not a question that they have not bothered, but there may have been many difficulties in the way. I think that is a very unfair reflection.

Mr. Gaitskell: The hon. Member misunderstands me. His own argument is itself an argument against this Clause. It is precisely because there are so many fortuitous factors which determine whether or not dollar exports are expanded that it is so difficult to base a tax relief on an increase in exports from one year to another.
One could think of another obvious example. Different industries were obviously affected very differently by devaluation. Broadly speaking, as I

understand it, the exporters of whisky have been able quite materially to expand the sterling value of their sales without much trouble. They have not had to cut their prices and they have simply received the increased sterling value as a result of devaluation. On the other hand, the textile exporters, to whom the hon. Member referred, have not had such an easy wicket. They have had a good deal of difficulty to contend with and a good deal more competition to meet, and I suppose they have had to reduce their dollar prices a good deal more, with the consequence that the sterling value of their sales has probably not risen by nearly so much.

Sir Herbert Williams: Does not the Clause refer to dollar receipts, so that devaluation has no bearing on the point?

Mr. Gaitskell: Dollar receipts converted into sterling because, after all, they have to be compared with the total profits of the firms themselves. I am putting the argument generally. There is a strong argument, therefore, against taking a base period, and saying, "We will give a tax relief on the increase from that time onwards."
The most obvious alternative, of course, would be to take the total dollar sales, but the difficulty there is that one does not get the incentive at all. Under that system one does not base the tax on the increase but simply on the sales that occur, so that we come up against the point which I think the hon. Member for Croydon, North (Mr. Frederic Harris) had in mind—that inevitably there is a good deal of luck, of position in the market and so on, which makes it very difficult to base tax relief upon that principle.
Nor do I think we can overlook the fact that if we started to single out one body of persons and said, "We will give you special tax relief," then we should certainly be faced with all sorts of other claims. We have only to consider the position of the workers in those industries. They would say, "After all we contributed to this; we have worked overtime to do it and we ought to get something here, some tax relief on the overtime, over and above what the other people get." There would be other persons handling the goods at the ports who had


made special efforts to get the goods sent out and there would equally be pressure from them.
Another difficulty is that, quite frankly, I do not think this proposal would be very effective. Perhaps I may give the Committee an example which will make clear what I mean. Supposing the total sales of the firm in question amount to £1 million and, let us say, to start with £100,000 of that sum is derived from exports to the dollar area. The rate of profit, we assume, is 10 per cent. Suppose then that the American sales—the North American sales—are doubled, then the profit ranking for relief would be £10,000 on an increase of £100,000. Profits Tax on this at the basic rate of 10 per cent. would be £1,000, but Profits Tax is deductible in computing Income Tax, and the reduction of £1,000 in the Profits Tax payable would increase the Income Tax by £450, so the company would be left with about £550 on an increase in sales of £100,000. It is not likely in these circumstances—and I have taken a case of sales actually doubled—that we shall get very much incentive in that way. We have to add in consideration of relief on double taxation in the case of companies operating through subsidiaries in North America, and the profits would be even smaller.
There are other difficulties as well. Would one confine the relief to the actual exporter, or should it be extended to the manufacturer behind the exporter? Would one ignore or include invisible exports? What would be the position of shipping earnings? What would be the position of tourist earnings and so on? I am sure that the hon. Gentleman will understand that there are a lot of practical difficulties about a scheme of this kind. It is only for that reason, I would assure him, that we have come reluctantly to the conclusion that this scheme is impracticable, and I may say, because I do not want to mislead the Committee, similar schemes are almost always impracticable.
However, we shall continue our efforts to see if we can find some method which is practicable to increase our dollar earnings and to overcome the difficulties because we all have at heart the raising of our dollar exports still further. Indeed,

devaluation itself has been the biggest incentive—a bigger automatic incentive—than anything we could have designed ourselves, and—[Interruption.] I said it gave a bigger incentive than any scheme of this kind we could devise ourselves.

Mr. Selwyn Lloyd: Do I take it that the right hon. Gentleman adheres to the view expressed earlier that devaluation is a device?

Mr. Gaitskell: I am talking of this particular device. Whether or not devaluation is a device I think we can leave over for the moment. But this certainly is a device, and I am saying that devaluation in its consequences is, I think, far greater than anything we could work out on these lines. As I say, we shall continue to explore the matter, and if we are satisfied that a better scheme exists we shall certainly not hesitate to adopt it.

Mr. Nigel Davies: I am glad that circumstances ensured that it was my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) who moved this Clause, and that he therefore had the opportunity of making a most excellent maiden speech on a subject with which he is very well familiar. Before dealing with the points that the right hon. Gentleman mentioned, and before talking on his objections, I should like to say a few general words about the purpose of this Clause, and the objects—the very necessary objects—that it is designed to achieve.
I am glad, and I appreciate the fact, that the right hon. Gentleman agreed that the objectives of the Clause are, at least, desirable, and that he even went so far as to say that he himself and his right hon. Friends would have been glad to be able to devise some scheme to meet this problem and to provide incentives for exports to dollar markets. I should have thought, in view of that, that it was up to him and the Chancellor of the Exchequer to produce a scheme. I cannot believe it is impossible to do so. Nobody would deny, I believe, that it is very necessary indeed. There is no Minister who does not exhort exporters every day to increase their dollar exports, and if every word that had been addressed on the subject to business gatherings had been translated into dollars, I think the problem would not exist at all.
It is clear, I think, from what has already been said, roughly how the Clause would operate. The whole basis and emphasis of it is on increased dollar exports, the principle being that a firm which increases its exports to dollar markets in ratio to its turnover by, say, x per cent. will get x per cent. off its Profits Tax.
What stands out from our dollar drive is that we have not succeeded in increasing the proportion of our sales to dollar markets in terms of dollars. That remains a stubborn fact, in spite of all the successes that have been proclaimed from the benches opposite in other markets—often in markets we ourselves have provided with the money with which to pay for our goods. The one outstanding difficulty, the one thing that hampers our efforts, as I have seen and experienced it, is the fact that we are exporting to countries where an entirely different economic climate prevails from that in the United Kingdom. The Committee is familiar with the difficulties and risks in the dollar market where the customer is king, where all firms and businesses are making frantic efforts to compete, and where only the successful survive.
Let me give but one example. To sell in the United States, a firm may have to pay a salesman 20,000 dollars a year. Even a typist in New York probably gets as much in salary as hon. Members of this Committee. Then, apart from the expenses, there are the unequalled risks involved, and above all the risk that tariffs will be changed against one, when the home manufacturer in the United States and Canada will come in and compete against a firm in successful lines.
As opposed to that, in the United Kingdom we have an entirely different commercial atmosphere which, by comparison, is unruffled and uncompetitive. Quite frankly, goods in many fields are too easy to sell. Let me quote from the Board of Trade Journal of 22nd April, 1950. I will not quote the general preamble about poor deliveries in this article on consumer goods, but let me quote one thing about linen and cotton. It says, talking about United Kingdom deliveries:
Deliveries are extremely poor, and four to six months are not uncommon. One of the reasons given for slow delivery is that manufacturers are booked up with orders for New Zealand, Australia and South Africa.

The whole trouble is, not only are our goods too easy to sell here but they are too easy to sell throughout the sterling area, owing to inflation emanating from this country, partly due to the release of sterling balances throughout the sterling area. Surely the lesson is that, as long as the inflationary situation exists, we must provide some extra incentive to provide the urge to exporters to export to dollar markets, which are much more difficult to tackle than the sterling area markets, particularly at a time when exporters and firms in general are so highly taxed, particularly through Profits Tax, as to make the whole thing just not worth while.
I myself have had experience in New York—and I must declare an interest in this matter, as perhaps in the general subject—in trying to sell our goods, in particular hardware goods, in that part of New York where hardware importers and wholesalers do their business. I have seen such pedestrian items as screwdrivers and pliers coming from the United Kingdom compared with those produced in Germany and the United States. Some exporters have, I know, made a great effort here and have succeeded, but the fact remains that on the whole such of our goods as I have seen do not compare favourably with those produced in the United States and those exported from Germany — [HON. MEMBERS: "No."] In this particular respect. I am talking of the hardware goods I have seen. I have seen the correspondence of firms from Great Britain who said they could sell their goods in Pakistan; they have been producing the same thing for a hundred years and they would not change.
10.15 p.m.
The whole object lesson is the fact that so long as this inflationary situation exists and goods are too easy to sell, we cannot expect people to make that effort. It is all very well to blame manufacturers for lack of enthusiasm, but they are responsible both to their employees and to their shareholders for the stability of their firms and employment in their firms. We cannot expect them to run risks in new markets when they have easy markets already at hand.

Mr. Daines: Is the hon. Gentleman saying that the manufacturing


and exporting interests of this country are incapable of appealing to any incentive other than the one which his hon. Friend put forward in moving this new Clause, and that the patriotic appeal does not cut any ice with them at all?

Mr. Davies: If the hon. Gentleman has experience of business, he cannot deny that directors of companies are responsible to their shareholders and employees to maintain full production in their businesses, and that they cannot risk business in dollar markets when they have assured markets elsewhere. It is not a practical proposition. We have to make it a business proposition if we expect them to do so. I am sure that the hon. Gentleman would not suggest that a nationalised hardware industry would be more successful in exporting hardware to the wholesale importers in the United States.

Mr. Messer: The profit-making motive is anti-social.

Mr. Davies: It works very well in the United States, and we do not sympathise with them for lack of prosperity. The fact is that if we are to maintain the momentum of our dollar exports, we have to do something extra.
The Minister produced detailed objections to this Clause—understandable objections. He pointed to the fact that firms which had already achieved a substantial measure of success would be entitled to object. All I will say, and I think that he will agree—certainly the statement of the Chancellor of the Exchequer bears this out—is that our economic situation is still serious to a point where we have simply got to do every thing, whoever objects, to increase our dollar sales. Whether it treads on certain susceptibilities or not, if we are to achieve that object, we must do something on the lines proposed in the new Clause.
The whole point is that although we may have achieved a certain success in export markets, we have not achieved unqualified success in the dollar market, which is the great thing. We have not only to maintain the momentum but to increase it, and therefore we have to do something new.

Mr. John Hynd: On a point of order. I understand that

the hon. Gentleman is not in fact talking to this particular Clause but to some hypothetical Clause which it not on the Order Paper. Is that in order, or is it a fact that the hon. Gentleman is still speaking on this Clause?

The Temporary Chairman (Mr. Batcher): I do not think that the hon. Gentleman is out of order.

Mr. Davies: I am speaking very precisely to the Clause which has been moved, and which I am backing fully and have explained very roughly. I did not go into detail because I did not want to detain the Committee. I am dealing with the objections which the right hon. Gentleman raised to arguments on this Clause.
The second objection, and the very natural one which he raised, was the question of who should benefit by these incentives and by this remission of Profits Tax. He mentioned possible resentment among manufacturers who do not themselves export. I would say that the benefits of this should go to the actual exporter—the man who does the sale in the dollar market—because he is the man who bears the risk, who has to do the advertising and pay the salesmen and who loses his money if an assignment is sent to the United States which cannot be sold. I do not think that is an objection which by itself rules out this Clause.
The right hon. Gentleman himself accepts the desirability of its objects. He went on to say that the Clause would not be effective; in other words, it would not be a sufficiently great incentive. By all means, if he is prepared to accept the Clause, I and my hon. Friends would gladly double or treble the incentive by proposing that, instead of a firm getting the same percentage as the percentage by which it increases its dollar exports, it should get three or four times as much. That would provide a much greater incentive. I realise that the incentive is small and limited, but I hoped that in making this limited proposal it might be acceptable to Members opposite. If the only criticism is that it does not provide enough incentive, then both sides can agree to provide a much greater incentive.

Mr. William Ross: The hon. Member has said that one of the reasons we are failing in our exports to


the United States is because our goods are not coming up to standard. He is also saying that our manufacturers must be given a greater incentive to export their goods, and he has told us that the incentive proposed in this Clause should go to the exporter. How does he balance these two things?

Mr. Davies: The hon. Member is playing with words. I may have used the word "manufacturer." I appreciate the hon. Member's intervention. I lay emphasis on the actual exporter, who is usually the manufacturer in the case of manufactured goods. If that is not the case, the incentive should go to the exporter. There may be cases where the exporter would make a price allowance to the manufacturer because he gets this extra incentive, which would make the thing worth while.

This Clause is a simple suggestion to provide an incentive, however modest. I am convinced that some incentive, even of this limited nature, is needed. I think we are agreed on all sides that something must be done to provide an extra incentive, so long as the inflationary conditions exist, to increase our dollar exports. Our exporters need encouragement, not in words but in deeds. I am convinced that if that encouragement is given they will do the job and increase the necessary dollar exports to meet our needs.

Sir H. Williams: I should not have spoken but for one of the arguments used by the Minister for Economic Warfare, or whatever he is called. The right hon. Gentleman suggested that if this scheme was put into operation it would be very unfair as between one class of exporter and another. He quoted, as an example of those who get an undue advantage, the exporters of whisky, and said that without any extra effort the same number of gallons would produce more sterling. I have gone into this since he spoke, and I find it is a false argument. Subsection (2, b) refers to the
the total receipts from a trade or business arising from a country referred to in subsection (1) of this section shall be the dollar receipts for the purpose of this section.
Therefore, the question of sterling does not arise. If the right hon. Gentleman refers to subsection (3), he will see it refers to the
proportion of those profits which is equivalent to the proportion which the excess of the dollar

receipts of the chargeable accounting period over the dollar receipts of the standard year bears to the total receipts from the trade or business of the chargeable accounting period.
In both cases the measure is in dollars and not sterling, and for that reason his argument seems to be invalid.
I am glad the right hon. Gentleman is trying to discover some incentive. I spent an interesting two hours a fortnight ago listening to an American gentleman whose name it would be improper for me to mention, who has some official position over here trying to stimulate the export of British goods to America, because they realise that it has to be done. At the other end of the conversation was a managing director of a firm with which I have some connection that does not suffer from the disability of the firm of my hon. Friend the Member for Epping (Mr. Nigel Davies), because it produces the highest quality goods of their kind. [An HON. MEMBER: "Where do you come in?"] I am glad to say that I get a little remuneration out of it.
The purpose of the discussion was to see to what extent our exports to the United States could be increased. Goods cannot be allotted for export in the simple expectation that we can sell them. It is a certain kind of goods that has to be sold, including capital goods which call for large stocks of spare parts, and so on. At the moment it has to be borne in mind that American buyers are exceedingly timid. They are placing their orders in negligible quantities so that it is not worth while producing them. Some incentive is required if a considerable amount of capital is to be sunk in a business and in the setting up an office in New York, or wherever the proper selling centre is. People are not encouraged to undertake this kind of work if they find that that which they earn is subject to Profits Tax and then what is left is charged Income Tax at 9s. in the pound.
Particularly is that so if the firm is owned by two or three people, who have to face Income Tax and Surtax charges. Men like that cannot be expected to risk their capital if the net result to them is going to be a negligible return. Therefore, an incentive has to be provided, and that incentive is provided by the profit motive. None of the pals of hon. Members opposite works overtime unless he gets paid for it.


We know that if a man works all night he demands 50 per cent. on his normal rate, and if he does not get it he will not do it, because he is animated by the profit motive. [Interruption.] What the Financial Secretary to the Treasury does not realise is that this is our weekly entertainment, which normally we pay for, but we get it here for nothing.

Mr. Harmar Nicholls: My hon. Friend the Member for Epping (Mr. Nigel Davies), in his extremely sound argument, used an unfortunate phrase when he referred to the fact that it was easy to sell. I do not think that is the interpretation which he would like to go on record. It would be truer to say that sales resistance in the sterling area is not quite as bad as sales resistance in the dollar area, though anybody in business knows that it is bad enough.

Mr. J. Hynd: I would just like to add a word for the sake of charity and for the sake of the record. We heard a speech from the other side of the Committee which was one of the best expositions of the policy of dumping which I have ever heard. It was advocating that inferior goods should be sold on foreign markets by means of continual increasing subsidies. Twice or three times the hon. Member for Epping (Mr. Nigel Davies) advocated that there should be these indirect subsidies for the purpose of insuring that goods go into foreign markets.
10.30 p.m.
The hon. Gentleman made special references to two articles, screwdrivers and pliers, and suggested that those produced here were of an inferior quality. I happen to represent a constituency where articles of that kind are made, and they can in quality face any competition in the world.
Only a short time ago I had a letter from an American firm of builders asking me if it were possible to buy British-made trowels, not from my constituency but from Birmingham, because there is nothing in America to touch them. I was able to put them in touch with a firm producing this article and they have been supplied. I want to protest against the suggestion that screwdrivers, pliers and other British steel made articles are of low quality.

Mr. Nigel Davies: I do not know whether the hon. Member listened to my speech. I do not know from where he got the reference to subsidies. If he reads the OFFICIAL REPORT he will find that that does not occur in what I said. I said nothing about screwdrivers and pliers and corkscrews, but I have seen these with a finish which was not on the same level as those produced by United States manufacturers. In some cases, the burning marks in making them were not removed. I come back to what my hon. Friend said about sales resistance. It is far less in Australia than it is in America, for instance, and therefore there is not the inducement to change goods to meet United States competition, which is fierce, indeed, and becoming fiercer since the end of the war. I advocate no form of subsidy, but a tax remission, an incentive, which the Minister says is desirable, if not necessary, to meet the case.

Question put, and negatived.

New Clause.—(DUTY ON CINEMA ENTERTAINMENTS.)

Mr. H. Nicholls: On a point of order. I understand it was the intention that the new Clause standing in the name of the hon. Member for Caithness and Sutherland (Sir D. Robertson) relating to the duty on cinema entertainments should have been discussed with that in the name of the hon. Member for Cheadle (Mr. Shepherd). I understand why the Clause of the hon. Member for Cheadle has been withdrawn, but it appears that the Clause in the name of the hon. Member for Caithness and Sutherland raises certain problems relating to exhibitors, and particularly to small exhibitors, which perhaps did not arise on the Clause that has been withdrawn.

The Temporary Chairman (Mr. Butcher): The Clause is out of order.

New Clause.—(AMENDMENT OF SECTION 15 OF THE FINANCE ACT, 1925.)

Subsection (2) of section fifteen of the Finance Act, 1925, shall be amended by the substitution of the words "by the end of," for "at the commencement of."—[Mr. Carr.]

Brought up, and read the First time.

Mr. Carr: I beg to move, "That the Clause be read a Second time."
This is a simple matter over which I need not detain the Committee. All I


need do is briefly explain the purpose of it and the reasons why I am moving it. The purpose is to give a small help in respect of age allowances to elderly people with small incomes. When a man reaches the age of 65, and has an income of less than £500 a year, he receives an age allowance. There is one feature about age allowances which I wish to change in this new Clause. At the moment the allowance takes effect only from the beginning of the following financial year; that is to say, if a man becomes 65 in May, he has to wait until the financial year beginning the following April before he gets the allowance. This new Clause seeks to change that so that he gets it from the beginning of the year in which he reaches qualifying age.
I submit the Clause for the Committee's approval because it is in line with other Income Tax allowances. Marriage allowance and children's allowance are both-back-dated to the beginning of the year in which the event occurs. It is a highly profitable thing, from the point of view of Income Tax, to be married or to have a baby before the end of March. I hope that the Minister of Health does not find himself faced with a highly seasonal trade for maternity beds. If these allowances can start from the beginning of the year in which the event occurs, the same should apply to the other allowances.
It may be argued that marriage and the arrival of children are specific events, involving specific expenditure which is not the case in retirement on reaching the age of 65. I submit that there are peculiar difficulties and worries associated with the time of retirement at that age, and I feel that we can give a small help in this direction. That help would be appreciated by the persons concerned, and could be given at a small cost to the Exchequer. I hope that hon. and right hon. Gentlemen opposite will share this view and that the Solicitor-General will see his way to accept the Clause.

The Solicitor-General: The Government are prepared to accept the proposal embodied in this new Clause, and if the hon. Gentleman who moved it will be good enough to ask the leave of the Committee to withdraw it, I will put down an Amendment on the Report stage which will carry out the purpose of the Clause.

Mr. Carr: I am sure I speak on behalf of hon. Members on all sides of the Committee when I thank the right hon. and learned Gentleman for his attitude to this Clause, and I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(ALLOWANCE FOR HOUSEKEEPER IN CASE OF CERTAIN UNMARRIED PERSONS.)

(1) If the claimant proves—

(a) that at the commencement of the year of assessment he has reached the age of fifty-five years; and
(b) that he was unmarried throughout the year of assessment; and
(c) that a female person is resident with and maintained or employed by him in the capacity of a housekeeper; and
(d) that neither he nor any other individual is entitled to a deduction in respect of the same person under this or any of the provisions of section nineteen and section twenty of the Finance Act, 1920, or section fifteen of the Finance Act, 1943,

he shall be entitled to a deduction of £50.
(2) Where more than one individual is entitled to relief under this section in connection with the same person employed in the capacity of a housekeeper the fifty pounds mentioned in subsection (1) of this section shall be apportioned between them in such proportions as may be agreed between them or in default of agreement m proportion to the amounts of the provision made or paid to, the person maintained or employed as defined in paragraph (c) of subsection (1) of this section.
(3) No more than one deduction of tax shall be allowed under this section to any claimant for any year.—[Mr. C. S. Taylor.]

Brought up, and read the First time.

Mr. C. S. Taylor: I beg to move, "That the Clause be read a Second time."

The Clause is designed to extend the housekeeper's allowance of £50 to unmarried persons, whether male or female, who attain the age of 55. As the House knows, the housekeeper's allowance is obtainable by the taxpayer only if the claimant is a widow or widower, irrespective of age and irrespective of fact that they may or may not have in their care children who qualify for the children's allowance. It seems to me to be quite illogical that a widow or widower, who might be young, even in the early 20's, in good health and without family obligations, can be in a position to obtain


this allowance, whereas elderly unmarried people are not.

Elderly unmarried people of this age are probably in greater need than the young people I have mentioned. Moreover, elderly unmarried taxpayers, even though they suffer from some infirmity, cannot qualify for their dependant relative's allowance of £25. That is restricted to those cases where a daughter is looking after them. Since the housekeeper's allowance was first introduced its scope has been extended and widened from time to time. As far as I know, nothing has yet been done to help these elderly unmarried people, unless they have young children under their care. I ask the Committee to be good enough to accept this new Clause, and to dispense with this anomaly. I cannot believe that the cost to the Exchequer would be very great, and it would relieve many people and do away with considerable hardship.

Miss Ward: This is rather an old controversy which has been argued on many occasions, but I wish to add my support for the new Clause which has been moved by the hon. Member for Eastbourne (Mr. C. S. Taylor). As a matter of fact it is rather a new controversy from the point of view of this Committee, because we have had on many occasions in the past arguments as between men and women, but on this occasion it is really between the married and the unmarried.
As the principle behind this new Clause has a great deal of support, particularly from civil servants and the National Union of Teachers, I hope we shall be able to persuade the Treasury to accept the proposals contained in it. If I may say so, I am not absolutely certain that I shall not be able to persuade the Chancellor of the Exchequer, because I remember with great appreciation that during the war he was susceptible to pressure for equality of treatment in certain instances which were brought to his notice in the war years.
I think it might clarify matters for hon. Members who may not have been particularly interested in the proposal which has been put forward if, for the information of the Committee, I were to give one or two instances which have been supplied to me by the National Union of

Teachers, so as to indicate why we are pressing for this particular allowance to be made. There is the case of two sisters, one of whom is widowed and who serves as director and secretary of a firm, but does her work at home and can claim a housekeeper's allowance. The other sister is single, and a teacher, she has to go out to her work each day and is unable to claim the allowance.
There is the instance of two single sisters, one a teacher and the other a civil servant. They had an invalid mother who could not be left. They employed a housekeeper, and, as she was elderly, it was necessary to have a daily woman to do the housework. They received no allowance for the housekeeper or for daily woman. In contrast, a widow who was working and drawing a pension in respect of her husband, employed a resident housekeeper and received an allowance for that housekeeper. In order that there shall be no sex discrimination, I have a particular case to bring to the notice of the Committee relating to bachelors. An elderly bachelor lived with his sister who acted as his housekeeper. Now she is failing in health, and they need a resident housekeeper, but cannot afford to have one as they get no allowance.
A woman teacher, now in the late fifties, has an elder sister who always kept house, first for the large family, and later for the aged parents. The parents are now deceased, and the teacher continues to keep her sister at home, as housekeeper, and bears all the expenses of the home. When her father was alive and widowed, he was able to claim income tax allowance in respect of his daughter, who acted as the housekeeper; but the sister is not entitled so to do.
10.45 p.m.
The argument that unmarried men and women should be put on a basis of equality compared with widowers and widows is a really human approach to a very real problem, and I cannot believe that the right hon. and learned Gentleman will not respond to the pressure from all sides of the Committee to end, once and for all, this great inequality. It is a very long time since any Government has really acceded to a measure of this kind, and the time has come, for once, to grant something which is put forward with the support of the civil servants and the


National Union of Teachers in respect of men and women who make a very great contribution to the national life. Therefore, I have pleasure in supporting the new Clause, and I cannot believe the Minister, with his goodness of heart, will refuse it.

Mr. Jay: As the hon. Lady says, this is an old controversy, and the history of the housekeeper's allowance illustrates the dangers in these matters of taxation which come from departing from a firm basis of logic and giving way to what appears to be goodness of heart.
The housekeeper's allowance, if I may briefly recall the history of the matter, was originally given only to widowers where there was a female person living in the house looking after a young child. It was extended in 1920 to widows and widowers who had a female housekeeper looking after children and also to any single taxpayer with a female relative looking after children. That was a reasonable basis of logic, so far. In 1924, as the hon. Lady knows, it was decided by the House to remove the condition of the existence of the young child in the household in the case of the widower and the widow only, and from that moment there has been a certain element of lack of logic about the working of the housekeeper's allowances.
In 1943, in response to representations on the subject of these allowances, the late Sir Kingsley Wood agreed to review the whole matter, and went into the question thoroughly. He came to the conclusion that the basis of the allowance should, in future, be a double one: first, that it should be confined to persons who were getting the adopted child relief in respect of young persons in the household, and secondly, that a housekeeper should also be maintained. These conditions, however, were not applied to the case of the widower or the widow, but only to other taxpayers, and Sir Kingsley Wood said frankly at the time that he did not think the extension to the widower and the widow was wise, but it having been made, he saw no special reason to withdraw it. In all other cases the allowance would be confined to those where young children were present in the household.
I think that is sound. We do not feel able to disagree with the conclusions Sir

Kingsley Wood then arrived at, and indeed, if one were to depart in general, even with the age limit proposed by the hon. Gentleman, from the condition of the young child, I think, there would be a further anomaly. One would then find that the single taxpayer, who chooses and can afford to maintain a housekeeper in his or her household, would be able to obtain an allowance towards that at the expense of the Revenue, whereas another taxpayer, who cannot afford or does not wish to maintain such a housekeeper, would not be able to do so. I think that: would introduce a further anomaly into the working of this allowance, and therefore I must ask the Committee to reject the new Clause.

Miss Ward: Before the hon. Gentleman sits down, may I ask whether it is his intention always to follow the advice of Conservatives, or does he not have a mind of his own?

Mr. Jay: I propose to agree with Conservatives only when they appear to be right.

Mr. C. S. Taylor: What would the cost of this concession amount to?

Mr. Jay: It is very hard to estimate. It probably would not be very much.

Lieut.-Colonel Sir Thomas Moore: I expect the Committee as a whole will completely disagree with the arguments advanced by the hon. Gentleman. In fact, he said nothing on which to convince us. He referred, of course, to the period when Sir Kingsley Wood decided, rightly or wrongly, to set down certain restrictions on the award of this allowance, but conditions have altered very much since then. These are days of full employment. We are all working now. We have all got to be out at our daily work and we have to leave our house or our flat, or whatever it may be, uncared for. Therefore, whether or not there a child in the flat, the flat must be kept clean and tidy, the beds must be made, and all the necessary arrangements of a house or a flat must be kept up.
We have had already in this Debate, first, a married man speaking—and I must admit that he spoke remarkably convincingly for a married man—then we have had a spinster. I can never understand quite why she should be one still, if I may say so. It does show the lamentable


want of enterprise on the part of many of my bachelor colleagues in this Committee. Now there is speaking one who must disclose his interest, for I am one of the many who are in the very position which this Clause seeks to cover. I have to contribute as much of my time as possible to the service of this House. I have to earn my living outside it. [AN HON. MEMBER: "Why?"] I always thought it was an essential thing to try to earn one's living, and I never knew it was really derogatory to a man's character to do so.
I do think, therefore, as one who is representing quite a substantial number of the community, that I have a right to ask the hon. Gentleman to give a few more reasons why he cannot accede to this new Clause than he has given so far. To my mind it is one of the least costly and yet most beneficial of any of the new Clauses which hon. Members have asked the Government to accept during the proceedings of this Finance Bill. If the hon. Gentleman had even advanced one argument which would have convinced the Committee, we would have

been prepared probably to accept it, but those arguments being what they were, I think my hon. Friend might be well advised to take further action to see that this new Clause is accepted.

Viscountess Davidson: I should like very shortly to support this Clause on behalf of a section of the community who, I believe are very definitely suffering, and suffering mostly in silence. Although this matter may be argued according to certain actions taken by past Chancellors of the Exchequer, nevertheless I do not see that the arguments put forward by the Financial Secretary are logical at all. I see no reason why this particular allowance should not be made and thereby help a section of the community who deserve that help.

Mr. C. S. Taylor: Are we to have a further reply to the speeches made since the Financial Secretary spoke?

Question put, "That the Clause be read a Second time."

The Committee divided. Ayes, 273; Noes, 287.

Division No. 43.]
AYES
[10.58 p.m.


Aitken, W T.
Clarke, Brig. T. H. (Portsmouth, W.)
Gates, Maj. E. E.


Alport, C. J. M.
Clyde, J. L
George, Lady M. Lloyd


Amery, J. (Preston, N.)
Colegate, A
Gomme-Duncan, Col. A.


Arbuthnot, John
Cooper, A E. (Ilford, S.)
Granville, E. (Eye)


Ashton, H. (Chelmsford)
Cooper-Key, E. M.
Gridley, Sir A.


Assheton, Rt. Hon. R. (Blackburn, W.)
Corbett, Lieut.-Col. U. (Ludlow)
Grimond, J.


Astor, Hon. M
Craddock, G. B. (Spelthorne)
Grimston, Hon. J. (St. Albans)


Baker, P.
Cranborne, Viscount
Grimston, R. V. (Westbury)


Baldock, J. M.
Cross, Rt. Hon. Sir R
Harden, J. R. E.


Banks, Col. C.
Crosthwaite-Eyre, Col. O. E.
Hare, Hon. J. H. (Woodbridge)


Baxter, A. B.
Crouch, R. F.
Harris, F. W. (Croydon, N.)


Beamish, Maj. T V. H.
Crowder, F. P. (Ruislip-Northwood)
Harris, R. R. (Heston)


Bell, R. M.
Cundiff, F. W.
Harvey, Air-Codre. A. V. (Macclesfield)


Bennett, Sir P. (Edgbaston)
Cuthbert, W. N.
Harvey, I. (Harrow, E.)


Bennett, R. F. B. (Gosport)
Darling, Sir W. Y. (Edinburgh, S.)
Hay, John


Bennett, W. G. (Woodside)
Davidson, Viscountess
Head, Brig. A. H


Bevins, J. R. (Liverpool, Toxteth)
Davies, Nigel (Epping)
Heald, L. F.


Birch, Nigel
de Chair, S.
Heath, Col. E. R.


Bishop, F P.
De la Bère, R.
Henderson, John (Cathcart)


Black, C. W.
Deedes, W. F.
Hicks-Beach, Maj. W W


Boles, Lt.-Col. D. C. (Wells)
Dodds-Parker, A. D.
Higgs, J M. C.


Boothby, R.
Douglas-Hamilton, Lord M.
Hill, Mrs. E. (Wythenshawe)


Bossom, A. C.
Drayson, G. B.
Hill, Dr C. (Luton)


Bowen, R.
Drewe, C.
Hinchingbrooke, Viscount


Bower, N.
Dugdale, Maj. Sir T. (Richmond)
Hirst, Geoffrey


Boyd-Carpenter, J. A.
Duncan, Capt. J. A. L.
Hogg, Hon. Q.


Braine, B.
Duthie, W. S.
Hollis, M. C.


Braithwaite, Lt.-Comdr. J G
Eccles, D. M.
Holmes, Sir J. Stanley (Harwich)


Bromley-Davenport, Lt.-Col W
Eden, Rt. Hon. A.
Hope, Lord J.


Brooke, H. (Hampstead)
Elliot, Lieut.-Col. Rt. Hon. Walter
Hopkinson, H. L. D'A.


Browne, J. N. (Govan)
Erroll, F. J.
Hornsby-Smith, Miss P


Buchan-Hepburn, P. G. T
Fisher, Nigel
Horsbrugh, Miss F.


Bullock, Capt. M.
Fort, R.
Howard, G. R. (St. Ives)


Bullus, Wing-Commander E E.
Foster, J. G.
Howard, S. G. (Cambridgeshire)


Burden, Squadron-Leader F. A.
Fraser, Hon. H. C. P. (Stone)
Hudson, Sir Austin (Lewisham, N.)


Butler, Rt Hon. R. A. (S'ffr'n W'ld'n)
Fraser, Sir I. (Lonsdale)
Hudson, Rt. Hon R S. (Southport)


Carr, L. R. (Mitcham)
Galbraith, Cmdr. T. D. (Pollok)
Hudson, W R A (Hull, N.)


Carson, Hon. E.
Galbraith, T. G. D. (Hillhead)
Hulbert, Wing-Cdr. N. J.


Channon, H
Gammans, L. D.
Hutchinson, Geoffrey (Ilford, N.)


Clarke, Col. R. S. (East Grinstead)
Garner-Evans, E. H (Denbigh)
Hutchison, Lt.-Com. Clark (E'b'rgh W.)




Hyde, H. M
Morrison, Maj. J. G. (Salisbury)
Spearman, A. C. M


Hylton-Foster, H B.
Morrison, Rt. Hon. W. S (Cirencester)
Spence, H. R. (Aberdeenshire, W.)


Jeffreys, General Sir G
Mott-Radclyffe, C. E
Spens, Sir P. (Kensington, S.)


Jennings, R.
Nabarro, G
Stanley, Capt. Hon. R. (N. Fylde)


Johnson, Howard S. (Kemptown)
Nicholls, H.
Stevens, G. P.


Jones, A (Hall Green)
Nicholson, G
Steward, W. A. (Woolwich, W.)


Joynson-Hicks, Hon L W
Nield, B. (Chester)
Stoddart-Scott, Col. M.


Kaberry, D.
Noble, Comdr. A. H. P.
Storey, S.


Keeling, E. H
Nugent, G. R. H.
Strauss, Henry (Norwich, S.)


Kerr, H W. (Cambridge)
Nutting, Anthony
Stuart, Rt. Hon. J. (Moray)


Kingsmill, Lt.-Col. W. H
Oakshott, H D.
Studholme, H G


Lambert, Hon. G.
Odey, G. W.
Summers, G S.


Lancaster, Col. C. G
O'Neill, Rt. Hon. Sir H.
Sutcliffe, H.


Langford-Holt, J.
Ormsby-Gore, Hon. W. D
Taylor, C. S. (Eastbourne)


Law, Rt. Hon. R. K
Orr, Capt L. P. S.
Taylor, W. J. (Bradford, N.)


Leather, E. H. C
Orr-Ewing, Charles Ian (Hendon, N.)
Teeling, William


Legge-Bourke, Maj E. A. H
Orr-Ewing, Ian L. (Weston-super-Mare)
Thomas, J. P. L. (Hereford)


Linstead, H N
Osborne, C
Thompson, K. P. (Walton)


Llewellyn, D
Perkins, W. R. D
Thompson, R. H. M. (Croydon, W.)


Lloyd, Rt. Hon. G. (King's Norton)
Peto, Brig. C. H M
Thorneycroft, G. E. P. (Monmouth)


Lloyd, Maj. Guy (Renfrew, E.)
Pickthorn, K.
Thornton-Kemsley, C N


Lloyd, Selwyn (Wirral)
Powell, J. Enoch
Tilney, John


Lockwood, Lt.-Col. J. C.
Prescott, Stanley
Touche, G. C


Longden, G. J. M (Herts, S W.)
Price, H. A (Lewisham, W.)
Turton, R. H


Low, A. R. W.
Prior-Palmer, Brig. O.
Tweedsmuir, Lady


Lucas, P. B. (Brentford)
Profumo, J. D.
Vane, W. M. F.


Lucas Tooth, Sir H.
Ralkes, H V
Vaughan-Morgan, J K


Lyttelton, Rt. Hon O
Rayner, Brig. R
Vosper, D F.


McCallum, Maj. D.
Redmayne, M
Wakefield, E. B (Derbyshire, W.)


McCorquodale, Rt Hon. M. S.
Remnant, Hon P.
Wakefield, Sir W. W. (St. Marylebone)


Macdonald, A. J. F. (Roxburgh)
Renton, D. L M
Walker-Smith, D. C.


Macdonald, Sir P. (I. of Wight)
Roberts, Emrys (Merioneth)
Ward, Hon G. R. (Worcester)


Mackeson, Brig H. R
Roberts, P. G (Heeley)
Ward, Miss I. (Tynemouth)


McKibbin, A.
Robertson, Sir D. (Caithness)
Waterhouse, Capt C


McKie, J. H. (Galloway)
Robinson, J. Roland (Blackpool, S.)
Watkinson, H.


Maclay, Hon. J S
Robson-Brown, W (Esher)
Watt, Sir G. S. Harvie


Maclean, F. H. R.
Rodgers, J (Sevenoaks)
Webbe, Sir H. (London)


MacLeod, Iain (Enfield, W.)
Roper, Sir H.
Wheatley, Major M. J. (Poole)


MacLeod, John (Ross and Cromarty)
Ropner, Col L
White, J Baker (Canterbury)


Macpherson, N. (Dumfries)
Ross, Sir R D (Londonderry)
Williams, C. (Torquay)


Maitland, Comdr. J W
Russell, R S.
Williams, Gerald (Tonbridge)


Manningham-Buller, R. E
Ryder, Capt R E. O.
Williams, Sir H G. (Croydon, E.)


Marlowe, A. A H
Savory, Prof D L.
Wills, G.


Marples, A. E
Scott, Donald
Wilson, Geoffrey (Truro)


Marshall, D. (Bodmin)
Shepherd, W S (Cheadle)
Winterton, Rt. Hon. Earl


Marshall, S. H. (Sutton)
Smiles, Lt.-Col. Sir W
Wood, Hon R


Maude, A. E. U. (Ealing, S.)
Smith, E. Martin (Grantham)
York, C


Maude, J. C. (Exeter)
Smithers, Peter H. B. (Winchester)
Young, Sir A. S. L.


Maudling, R
Smithers, Sir W. (Orpington)



Mellor, Sir J
Smyth, Brig J. G. (Norwood)
TELLERS FOR THE AYES:


Molson, A. H. E.
Snadden, W McN
Mr. Conant and Mr. Wingfield Digby.


Moore, Lt.-Col. Sir T.
Soames, Capt. C.





NOES


Acland, Sir Richard
Brown, George (Belper)
Davies, R. J. (Westhoughton)


Adams, Richard
Brown, T. J. (Ince)
Davies, S. O. (Merthyr)


Albu, A. H.
Burke, W. A.
de Freitas, Geoffrey


Allen, A. C. (Bosworth)
Burton, Miss E.
Deer, G.


Anderson, F. (Whitehaven)
Butler, H. W. (Hackney, S.)
Dodds, N. N.


Attlee, Rt. Hon. C. R.
Callaghan, James
Donnelly, D.


Awbery, S S.
Castle, Mrs. B. A.
Donovan, T. N.


Ayles, W. H.
Champion, A. J.
Driberg, T. E. N.


Bacon, Miss A
Chetwynd, G. R.
Dugdale, Rt. Hon. J. (W. Bromwich)


Baird, J.
Clunie, J.
Dye, S.


Balfour, A.
Cocks, F S.
Ede, Rt. Hon. J. C.


Barnes, Rt. Hon. A. J.
Coldrick, W.
Edelman, M.


Bartley, P.
Coilick, P.
Edwards, John (Brighouse)


Bellenger, Rt. Hon. F. J
Collindridge, F.
Edwards, Rt. Hon. N. (Caerphilly)


Benson, G.
Cook, T. F.
Edwards, W. J. (Stepney)


Beswick, F.
Cooper, G. (Middlesbrough, W.)
Evans, Albert (Islington, S. W.)


Bevan, Rt. Hon. A. (Ebbw Vale)
Cooper, J. (Deptford)
Evans, E. (Lowestoft)


Bing, G. H. C.
Corbet, Mrs. F. K. (Peckham)
Evans, S. N. (Wednesbury)


Blackburn, A. R.
Cove, W. G.
Ewart, R.


Blenkinsop, A.
Craddock, George (Bradford, S.)
Fernyhough, E.


Boardman, H.
Crawley, A.
Field, Capt. W. J.


Booth, A.
Cripps, Rt. Hon. Sir S.
Finch, H. J.


Bottomley, A. G.
Crosland, C. A. R.
Fletcher, E. G. M. (Islington, E.)


Bowden, H. W.
Crossman, R. H. S.
Follick, M.


Bowles, F. G. (Nuneaton)
Cullen, Mrs. A.
Forman, J. C.


Braddock, Mrs. E. M.
Daines, P.
Fraser, T. (Hamilton)


Brockway, A. Fenner
Darling, G. (Hillsboro')
Freeman, J. (Watford)


Brook, D. (Halifax)
Davies, A. Edward (Stoke, N.)
Freeman, Peter (Newport)


Brooks, T. J. (Normanton)
Davies, Ernest (Enfield, E.)
Gaitskell, Rt. Hon. H T. N


Broughton, Dr. A. D. D.
Davies, Harold (Leek)
Ganley, Mrs. C. S.







Gibson, C. W.
Logan, D. G.
Ross, William (Kilmarnock)


Gilzean, A.
Longden, F. (Small Heath)
Royle, C.


Glanville, J. E. (Consett)
McAllister, G.
Shackleton, E. A. A.


Gooch, E. G.
MacColl, J. E.
Shawcross, Rt. Hon. Sir H.


Gordon, Walker, Rt. Hon. P. C.
McGhee, H. G.
Shurmer, P. L. E.


Greenwood, A. W. J. (Rossendale)
McInnes, J.
Silverman, J. (Erdington)


Greenwood, Rt. Hn. Arthur (Wakefield)
Mack, J. D.
Silverman, S. S. (Nelson)


Grenfell, D. R.
McKay, J (Wallsend)
Simmons, C. J


Grey, C. F.
Mackay, R. W. G. (Reading, N.)
Slater, J.


Griffiths, D. (Rother Valley)
McLeavy, F
Smith, Ellis (Stoke, S.)


Griffiths, Rt. Hon. J. (Llanelly)
MacMillan, M. K. (Western Isles)
Snow, J. W.


Griffiths, W. D. (Exchange)
McNeil, Rt. Hon. H.
Sorensen, R. W.


Gunter, R. J
MacPherson, Malcolm (Stirling)
Soskice, Rt. Hon. Sir F


Hale, J. (Rochdale)
Mainwaring, W. H.
Sparks, J. A.


Hale, Leslie (Oldham, W.)
Mallalieu, E. L. (Brigg)
Steele, T.


Hall, J. (Gateshead, W.)
Mallalieu, J. P W. (Huddersfield, E)
Stewart, Michael (Fulham, E.)


Hall, Rt. Hon. Glenvil (Colne Valley)
Mann, Mrs. J.
Strachey, Rt. Hon. J.


Hamilton, W. W.
Manuel, A. C.
Strauss, Rt. Hon. G. R. (Vauxhall)


Hannan, W.
Marquand, Rt. Hon. H. A
Stross, Dr. B.


Hardman, D. R.
Mathers, Rt. Hon. George
Summerskill, Rt. Hon. Edith


Hardy, E. A.
Mellish, R. J.
Sylvester, G. O.


Hargreaves, A.
Messer, F.
Taylor, H. B. (Mansfield)


Harrison, J.
Middleton, Mrs. L.
Taylor, R. J. (Morpeth)


Hastings, Dr. Somerville
Mikardo, Ian
Thomas, D. E. (Aberdare)


Hayman, F. H.
Mitchison, G. R.
Thomas, George (Cardiff)


Henderson, Rt. Hon. A. (Rowley Regis)
Moeran, E. W.
Thomas, I O. (Wrekin)


Herbison, Miss M.
Monslow, W.
Thomas, I. R. (Rhondda, W.)


Hewitson, Capt. M.
Moody, A. S.
Thorneycroft, Harry (Clayton)


Hobson, C. R.
Morgan, Dr. H. B.
Thurtle, Ernest


Holman, P.
Morley, R.
Timmons, J.


Holmes, H. E. (Hemsworth)
Morris, P. (Swansea, W.)
Tomney, F.


Houghton, Douglas
Mort, D. L.
Turner-Samuels, M


Hoy, J.
Moyle, A.
Usborne, Henry


Hubbard, T.
Mulley, F. W.
Vernon, Maj. W. F.


Hudson, J. H. (Ealing, N.)
Murray, J. D.
Viant, S. P.


Hughes, Emrys (S. Ayr)
Nally, W.
Wallace, H. W.


Hughes, Hector (Aberdeen, N.)
Neal, H.
Watkins, T. E.


Hughes, Moelwyn (Islington, N.)
Noel-Baker, Rt. Hon. P. J.
Webb, Rt. Hon. M. (Bradford. C)


Hynd, H. (Accrington)
Oldfield, W. H.
Weitzman, D.


Hynd, J. B. (Attercliffe)
Oliver, G. H.
Wells, P. L. (Faversham)


Irvine, A. J. (Edge Hill)
Orbach, M.
Wells, W. T. (Walsall)


Irving, W. J. (Wood Green)
Padley, W. E.
West, D. G.


Isaacs, Rt. Hon. G. A.
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Janner, B.
Paling, Will T. (Dewsbury)
White, Mrs. E. (E. Flint)


Jay, D. P. T.
Pannell, T. C.
White, H. (Derbyshire, N. E.)


Jeger, G. (Goole)
Pargiter, G. A.
Whiteley, Rt. Hon. W.


Jeger, Dr. S. W. (St. Pancras, S.)
Parker, J.
Wigg, George


Jenkins, R. H.
Paton, J.
Wilcock, Group-Capt. C. A. B.


Johnson, James (Rugby)
Pearson, A.
Wilkes, L.


Johnston, Douglas (Paisley)
Peart, T. F.
Wilkins, W. A.


Jones, D. T. (Hartlepool)
Poole, Cecil
Willey, F. T (Sunderland)


Jones, Frederick Elwyn (West Ham, S.)
Porter, G.
Willey, O. G. (Cleveland)


Jones, Jack (Rotherham)
Price, M. Philips (Gloucestershire, W.)
Williams, D. J. (Neath)


Jones, William Elwyn (Conway)
Proctor, W. T.
Williams, Ronald (Wigan)


Keenan, W.
Pryde, D. J.



Kenyon, C.
Pursey, Comdr. H.
Williams, W. T. (Hammersmith, S.)


Key, Rt. Hon. C. W
Rankin, J.
Wilson, Rt. Hon. J. H. (Huyton)


King, H. M.
Rees, Mrs. D.
Winterbottom, I. (Nottingham, C.)


Kinley, J.
Reeves, J.
Winterbottom R. E. (Brightside)


Lang, Rev. G.
Reid, T. (Swindon)
Wise, Major F. J.


Lee, F. (Newton)
Reid, W. (Camlachie)
Woods, Rev. G. S.


Lee, Miss J. (Cannock)
Richards, R
Wyatt, W. L.


Lever, L. M. (Ardwick)
Robens, A.
Yates, V. F.


Lever, N. H. (Cheetham)
Roberts, Goronwy (Caernarvonshire)
Younger, Hon. Kenneth


Lewis, A. W. J. (West Ham, N.)
Robertson, J. J. (Berwick)



Lewis, J. (Bolton, W.)
Robinson, Kenneth (St. Pancras, N.)
TELLERS FOR THE NOES:


Lipton, Lt.-Col. M.
Rogers, G. H. R. (Kensington, N.)
Mr. Popplewell and Mr. Delargy.

New Clause.—(AMENDMENT OF RATE OF EXCISE DUTY ON PRIVATE MOTOR CARS.)

(1) For the purpose of calculating the duty of excise chargeable under section six of the Vehicles (Excise) Act, 1949, in respect of a mechanically-propelled vehicle of a description specified in paragraph 2 of the Fifth Schedule to that Act, being a vehicle registered under the Roads Act, 1920, or that Act, the following paragraph shall be substituted for the said paragraph 2, that is to say—

"2. Other vehicles—

If registered under the Roads Act, 1920, or this Act



£
s.
d.


Not exceeding 7 horse-power
7
10
0


Exceeding 7 horse-power
10
0
0."

(2) This section shall come into operation on the first day of January, nineteen hundred and fifty-one.—[Mr. Boyd-Carpenter.]

Brought up, and read the First time.

Mr. Boyd-Carpenter: I beg to move "That the Clause be read a Second time."
The anomaly which we seek by this Amendment to correct arises, as I am sure hon. Gentlemen are aware, from the Finance Act, 1947. The Committee will recall that that Act provided that a car first registered before 1st January, 1947, should be taxed at a rate of 25s. per horsepower, but that any car first registered after that date should be taxed, regardless of horse-power, at a flat rate of £10. The existing position was ascertained as recently as possible by a Question asked by the hon. and gallant Member for Chelsea (Commander Noble) who asked the Financial Secretary to the Treasury how many motor cars registered before 1947 are now licensed; and what would be the total loss of revenue involved if they came under the £10 tax.
The Financial Secretary replied:
The latest figure for September, 1949, is about 1,789,000.
I would invite the attention of the Committee to the fact that that is a good many months ago. He added:
As my right hon. and learned Friend the Chancellor of the Exchequer said on 25th April in reply to the hon. Member for Hornsey (Mr. Gammans), the loss of revenue if they were all taxed at £10 would be about £6 million in a full year."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 32.]
This issue, as hon. Gentlemen will recall, has been raised on a number of previous occasions, and, in fact, it was raised on a Finance Bill under which the present situation was created—the Finance Act of 1947. It is perhaps significant that even on that occasion the then Chancellor of the Exchequer, when replying to an Amendment substantially similar to this, said:
… it is a pretty safe bet that at some date in the not far distant future the Amendment which has been put down by my hon. Friend will be adopted. I am making no promise—it would be wrong to do so—for next year. … When the amount has shrunk a little over a few years it will be an obvious point on which pressure might be brought to bear, and which eventually, when it becomes sufficiently cheap to meet, might be met."—[OFFICIAL REPORT, 9th July, 1947; Vol. 439, c. 2276.]
A Debate also took place on this issue on the Finance Bill of last year, when substantially the same Amendment was moved by the hon. Member for Huntingdon (Mr. Renton) and seconded by the then hon. Member for Bedford (Mr. Skeffington-Lodge), from the benches opposite. I hope the fact that the charge

of this Amendment has now passed from the sluggish waters of the Ouse to the more vigorous stream of the Thames will not cause hon. Members opposite to change their minds. I may also express the hope that the competition which took place between hon. Members last year as to the vintage of their cars will not be repeated this year, if only for the reason that my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss) would inevitably win. What is more important, and perhaps a little more relevant, is the fact that in last year's Debate the then Financial Secretary to the Treasury, the right hon. Member for Colne Valley (Mr. Glenvil Hall) said frankly that this was an anomaly, and in saying that indicated no more than that it was an anomaly that it was not proposed to remedy that year.
We must all agree that this is a curious anomaly. I do not want to weary the Committee with examples, but it is the fact that if any hon. Member is fortunate enough to own a big new car registered since 1st January, 1947, he pays taxation at the rate of £10 a year, whereas if owns, for example, an elderly Morris 12 registered before that he pays tax at the rate of £15. The fact that this is a completely arbitrary distinction will be better appreciated if hon. Members recall that it is not even the date of the car which governs the tax, but the date of registration. This aspect of the matter is vividly illustrated by an advertisement in the "Evening News" tonight—"Vauxhall 25 h.p. saloon, 1939, first registered 1947, £10 tax." It is perhaps not relevant to read the rest of the advertisement, other than to add that it is blue in colour, ex-Ministry, and fitted Masteradio. It is a curious illustration of the anomaly of this system that the identical vehicle, built in the identical year, would have carried tax at the rate of £31 5s. if it had been registered within eight years of construction.
It is not only the obvious unfairness between individuals which is material to this issue. There are also the somewhat unfortunate social consequences. All hon. Members will agree that it is valuable that car ownership should be as widely dispersed throughout the community as possible, and that it should not be the sole perquisite of any social class or income group. Many of us have seen in America the admirable development in


which a large proportion of industrial workers go to work in motorcars, and provide for their employers one of the most difficult of their problems in finding parking places. I know all hon. Members would welcome such developments here, but it is, of course, precisely upon such economically marginal motorists that this particular impost falls most heavily at the moment, because it is naturally the person of limited means, who has acquired an elderly car. Therefore, he has to bear a heavier rate of tax.
11.15 p.m.
I always find that specific examples are really more helpful in these matters than general assertions, and by way of illustration I should like to give one example of a skilled worker in a Midland town. He is the proud possessor of a 12 horse power Wolseley car, and I have seen the bill for running it. It amounts to £48 for the year, of which over one-third goes in this particular tax. I would add by way of further emphasis that, as it is the practice for obvious reasons for the weekly wage earner car owner to tax his car quarterly, it, of course, attracts a slightly heavier burden of tax by reason of the fact that the quarterly payments are rather more than one-quarter of the annual rate.
There is another aspect of the unfairness of the matter, and that is the unfairness inside the same income group between the people who can afford to obtain one of these new cars and have been able to get one, and those who can afford a new car but cannot get one. The State must accept a certain responsibility for that state of affairs. Hon. Members are aware of the fact that for the benefit of the export trade the number of cars allowed to come on to the home market has been deliberately restricted by Government policy. I am not concerned—and, indeed, I should be out of order if I were—with the merits of that matter, but with the consequences of the matter, which is that a large number of people would normally possess post-1947 cars and thereby obtain the benefit of the concession of the Finance Act, 1947, but have been unable to obtain that concession because of this interference with the normal flow of new vehicles to the home market. That was very well summed up recently in a letter to "The Times" by

the secretaries of the motoring organisations, in which they stated that the effect of this was that the public were denied new cars in the national interest and then penalised for not having them.
There is a new factor in the situation this year, on which I put considerable weight, and that is the fact that by an earlier Clause of this Bill this Committee have imposed a greatly increased Petrol Duty. That not only imposes—I am not arguing the merits of the matter—a general increased burden on the motoring community, but it imposes in particular a special burden upon the people who already suffer from the anomaly which this Amendment seeks to remedy, because old cars of medium or large size are the heaviest in petrol consumption, and, therefore, inevitably involve the owner in paying a larger share of the additional impost on the petrol than is the case with those who own more efficient and more modern machines.
There is a further argument. According to the answer which I understand was based on last September's figures, the cost of this concession would be in the neighbourhood of £6 million. It will be in the minds of the Committee that even since the increased Petrol Duty was announced in the Budget, the yield has been increased substantially by the abolition of the petrol ration, and in a smaller degree by the consequential abolition of the licensing duty at half rates. If my calculation is right, the whole of this concession would come to no more than a quarter of the additional revenue, which was not certainly in the mind of the Chancellor of the Exchequer even as recently as when he introduced his Budget.
I appreciate that when increased revenue becomes available there will be many claimants for distribution, but I strongly urge that there is a powerful claim that at any rate some of that extra revenue should go in the direction of relieving the burdens on that section of the community from whom the whole of the increased revenue will come—the motoring public. It is fair to suggest that where a larger revenue even than calculated by the Chancellor of the Exchequer has become available from this particular source, one-quarter of that additional revenue might reasonably be used to relieve what the Financial Secretary last year frankly admitted to be an anomaly.
There is another argument, which I hope will appeal to the Treasury. Unlike almost every other tax concession which we have been debating during the last five days, the cost of this concession, if made, would diminish and not increase as the years pass. In the ordinary course of events, notwithstanding the restriction to which I have referred, new cars will come into circulation and old ones will go out of circulation for one reason or another and the cost, therefore, if it be £6 million on the figures of last September, would become substantially less as the years pass.
Therefore, it seems to me that throughout the five days in which we have been discussing the details of the Finance Bill, there has been no better opportunity afforded to the Government to deal with the rectifying of an anomaly at so little permanent cost. It is in the hope that the Government will see fit to remedy this state of affairs, which on merits no one so far as I know has sought to defend, that I beg to move this new Clause.

Mr. J. Lewis: I intervene only for a moment because in the last Parliament I seconded the Amendment to the Finance Bill which sought to establish a £10 flat rate of tax. What the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has not mentioned in his speech is the purpose of that Amendment, which was to enable the motor car industry to standardise and produce motor cars suitable for the export trade. It was claimed at that time that engineering principles were being made subordinate to fiscal policy, and it was felt that the imposition of a £10 flat rate tax would enable larger cars to be built to a standard design to help the motor car industry to export.

Mr. Boyd-Carpenter: The hon. Gentleman has telescoped the arguments of debates in two separate years. If he reads the Report of the Debate in 1947, the flat rate on new cars was introduced for the reasons rightly given by him, but in 1949 he supported this Amendment with arguments which, though better expressed than those I have used this evening, which are substantially the same as mine.

Mr. Lewis: The original intention was to ensure that cars registered after a certain date were all of a type and kind suitable for the export market. Cars

registered before 1947, like hon. Members of this House, are getting older every day, and it is reasonable to suppose that in a year or so only a small number of cars registered before 1947 will be in use. I have a much higher regard for the efficiency of the motor car industry than hon. Members opposite possess. I think the hon. Member for Edgbaston (Sir P. Bennett) will support my contention that, in fact, in a few years time there will be fewer cars registered which were built before 1947.

Sir P. Bennett: As my name has been mentioned, may I inform the hon. Gentleman that preparation is in hand for spare parts to be made for old cars for many years to come, as very few new cars are coming on to the home market. There are less than one-half of the number of cars now coming on to the home market than were coming on to the market in 1938. There is also an untapped demand for one million new cars, so that the old cars will continue to be used, and spare parts are being used to keep them in operation for a very long time until that is met.

Mr. J. Lewis: It is not possible to manufacture old cars, but spare parts have to be made to keep old cars running just as old machinery, which has been established for many years, has to be maintained by the use of spare parts. I do not see the force of the argument made by the hon. Member for Edgbaston. The fact remains that we do know that by next year or the year after there will be substantially fewer old cars on the road than there are today. To my mind, as the original proposal was to introduce a flat rate of tax for new cars so that they should find a ready market in the export field, I see no justification for making a concession on this occasion.

Lieut.-Commander Braithwaite: I am not sure how the observations of the hon. Member for Bolton (Mr. J. Lewis) will be received by the Treasury Bench, but I should like to remind the Financial Secretary what his hon. Friend said in the course of the Debate a year ago:
There is the further point, the older the car the more petrol and oil it uses, and it costs more in repairs to maintain and run than does a new one. The export drive makes it relatively difficult to obtain more cars today in a short period, and, therefore, people are bound to keep their old vehicles whether they like it or not."—[OFFICIAL REPORT, 23rd June, 1949; Vol. 466, c. 892.]

Mr. J. Lewis: If the hon. and gallant Gentleman is drawing any conclusion from what was said a year or so ago, I would point out that a year has passed since then and many more cars have been built. By next year many more cars still will be built.

Lieut.-Commander Braithwaite: The hon. Gentleman strengthens the case for this new Clause every time he rises. But we do not wish to rely entirely on his observations made a year ago, relevant as they were then. Although 12 months have passed, the moving finger has written, and hon. Gentlemen can end the quotation. We, who have put our names to this new Clause, have grounds for cautious optimism as to the outcome of our advocacy this evening.
First of all there is the strength of our case, so admirably deployed by my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Secondly there are the altered circumstances compared with 12 months ago, which we believe have greatly strengthened our argument. Thirdly, I would put the far more yielding and accommodating attitude of His Majesty's Government compared with last year, and the concessions we have had. I see the right hon. and learned Solicitor-General is taking notes; I hope he is going to reply because we associate him with concessions, and I notice, too, that the Financial Secretary has an agreeable expression on his countenance at the moment.
11.30 p.m.
Then we are greatly encouraged by the fact that a London evening newspaper with leftward leanings, which on at least one occasion in the past showed remarkable accuracy in prophesying the Budgetary proposals of the Government, has set forth its view that a concession is to be made on this particular matter. There is a fifth reason which has seated itself on the Treasury Bench since I prepared these few notes, in the presence of the Parliamentary Secretary to the Ministry of Fuel and Power, the motorists' friend on a former occasion in connection with the Petrol Duty. He has seated himself in proximity to the Financial Secretary to the Treasury, so as to be on the bridge when the concession is made.
For all these reasons, we on these benches believe the Government are going to find themselves tonight able to

alter the attitude which they took up a year ago. Higher costs and maintenance expenses must, of course, fall as a result of other Budgetary proposals. It may well be we believe—and my hon. Friend behind stressed this point—that the cost of the concession may be less if granted tonight than would have been the case if it had been given on 27th June last year, when this matter was previously discussed, for reasons given by the hon. Member for Bolton (Mr. J. Lewis) this year—and I think he gave the same information a year ago on that point at least.

Mr. J. Lewis: Less next year.

Lieut.-Commander Braithwaite: And, of course, progressively that is likely to be the case. Without wishing to be guilty of repetition, I would press the Financial Secretary on this, because there is the strong reason in the form of the windfall which has descended on the Treasury since the introduction of the Budget—a windfall of the order of £20 million or £25 million. We have referred to this matter more than once during the Committee stage of this Bill. We were told on one occasion, I think by the hon. Gentleman himself, but it may have been by the Minister of State for Economic Affairs, that there were other uses for this windfall. He used the argument more than once, just as he argued that the Income Tax concessions would not be possible if the Petrol Duty were reduced. In view of the fact that we were told that this concession was likely to cost £5,500,000, we withdrew our proposal last year.
It does not seem to us very much to ask, that some 25 per cent.—I do not think it would be more—of the windfall from petrol should be used for relief of the motorist on the lines suggested by this Clause. I am not going to detain the Committee longer. I believe the case stands strongly on its own feet, and I hope the Government are going to finish a good day's work by making a very sensible concession to an important case by yielding this new Clause to us.

Lieut.-Colonel Lipton: This new Clause is not without merit, even though it is being moved this year by hon. Members opposite. If I claim some paternal interest in the proposition put forward by the hon. Member for


Kingston - upon - Thames (Mr. Boyd-Carpenter), it is due to the fact that on two previous occasions, in 1947 and in 1949, I spoke in favour of a fairly similar proposition. I hope that my hon. Friend the Financial Secretary to the Treasury will not consider me unduly obstinate in speaking three times in support of this concession.
I know that the question of cost is a factor which must be taken into account, but I am puzzled; and what puzzles me is this. In 1947, when the then Chancellor of the Exchequer was arguing this matter in the Committee, he pointed out that the cost of the concession would amount to some £5,500,000. In 1949, we were told by the Financial Secretary that the cost of the concession would be £5,750,000, and that it would cost £5,500,000 in 1950. As the hon. Member for Kingston-upon-Thames has pointed out, the latest figure seems to indicate that the concession would cost £6 million.
Where are all these old cars coming from? They are emerging, apparently, like Phoenix, and coming on to the road and, so to speak, inflating the amount which it will cost the Government if they should make this concession. I do not understand it. Perhaps the Financial Secretary, when he replies, will explain why it is that, notwithstanding that old cars become decrepit and fall out of use, the cost of the concession seems to go up from year to year.
I do not want to say anything more on that aspect of the matter, except to point out that the Chancellor of the Exchequer, in 1947, said that this was a point on which pressure might be brought to bear, and that eventually it might become sufficiently large for it to be difficult to resist. I hope the Financial Secretary will say that he can make some concession on what, the longer it continues, becomes more and more anomalous and indefensible as time goes on. I hope that he will not use the argument that the alleged increase in the amount which it is going to cost is the difficulty, or that, even if he can dispose of those figures, he will not use the other argument that because new cars pay Purchase Tax, and the old ones never did, this differentiation should continue.
Notwithstanding the Purchase Tax on the new cars, this £10 concession does not date back to the year when Purchase

Tax was first introduced on to cars; that was in 1941. Why then, should not the £10 rate be extended to all cars which have run since 1941. That is logical. Certain cars were bought with Purchase Tax on the price, and others were not, and I do hope that the Financial Secretary will find it possible to make the concession which we seek tonight.

Mr. Higgs: One point which occurs to me is that which has just been raised by the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton). There is this mysterious growth of cars which ought really, one would think, to disappear year by year. Can the Financial Secretary say if this year's figure of £6 million is larger because it is calculated against the present rate of duty as compared with the half-duty cars which drew only the standard ration? If that be the case, then there would be an entirely false comparison. When this anomaly was introduced, it admittedly created an injustice for a commercial reason which, in the opinion of the House at that time, over-weighed the political reasons which are an injustice in themselves.
Having regard to the fact that this has been argued in previous years, the most material consideration is the way in which alteration has taken place in the last 12 months. In particular, since the commercial reasons remain as sound as ever, the sense of injustice of those who labour under this anomaly may have increased. In the first place, those who move among motorists know quite well that as the new cars come on to the market at the high cost they are today, the old cars are getting increasingly into the hands of people of modest means. Those who could well afford to pay the higher rate of tax are getting less and less among the owners of the older cars. Meanwhile, the privileged class, who do not suffer from the anomaly, grow larger and larger. Then, of course, many people managed in the past to tax an old car at the reduced rate because they used only the basic petrol ration, and that has now gone. That may make an increased hardship.
Then again, there is the higher price of petrol. But what has not been mentioned, when we come to consider the sense of injustice added to that higher price, is the fact that one can—the question


of cost apart—have as much petrol as one likes. That means money has become for the first time more than ever the limiting factor upon motoring. That is why the injustice which this anomaly creates weighs more heavily this year than last year. There is another small point which will weigh with those who will have to pay this higher tax. Those who can afford new luxury cars of the most expensive class have received a concession on the Purchase Tax this year. It is another little thing that those who take an interest in the cost of their motoring will notice when they consider the hardships under which they labour.
It is worth mentioning in passing, because it is a class of the community which exists in considerable numbers, that there are, as time goes on since the war, an increasing number of people who for one reason and another live a considerable distance from their work. Those amongst them who can afford cars at all, including working men, have to have cars of the pre-1947 vintage and they are labouring under this difficulty. These people are increasing in numbers. There are more of them every year who travel to and from their work in old cars, and they are the sort of people who should be encouraged to have cars, not only because it is right they should have them, but because the fact they travel by car makes it easier for them to work better, to do the extra few minutes, and not to have to down tools and rush for the bus queue the moment the hooter goes.
Lastly, I think it must be mentioned again that every year there is this increasing factor of the higher cost of repairs to the old car. Repair bills amongst those whose cars are pre-war are very substantial considerations and it is upon these cars, as has been pointed out, that this tax falls most heavily. This sort of injustice may have been argued in previous years, but to every one of them there is a small percentage added with the passage of time. Above all, we have this year the great burden of the roving eye of the Chancellor of the Exchequer falling upon the motoring community. We are asking for a concession to be given to those who have borne the greater part of the burden and to those who have had opened up to them a vista of motoring with unlimited petrol and who suddenly

find the limitation of their means becomes the limitation of their motoring.

11.45 p.m.

Mr. Lyttelton: I only intervene for one minute because there is one point I should like particularly elucidated by the Financial Secretary. We were told in the Debate on Purchase Tax on commercial vehicles that this was a "fiscal weapon," which was intended to deter the demand for new commercial vehicles in order that they might be diverted into the export market.
The extremely tendentious and pretentious nature of this argument can be seen in regard to new cars. Everybody agrees that the export of new cars is equally necessary; so that if we followed the Treasury argument for commercial vehicles we would expect to see some advantages given to those called upon to use their old cars, with the increased cost of their maintenance and petrol consumption, in order that the "fiscal weapon" might be provided to stimulate the export of new cars and reduce the pressure of demand upon cars in the home market.
Of course, the truth is that there is nothing in the Treasury argument about commercial vehicles. They simply change their minds as it suits them, Clause by Clause. Now as the result of this there is the ridiculous anomaly by which a man with, say, an old Ford utility car, pays £27 a year tax, and the owner of a new 25 horse-power car pays £10. The effect is to increase the pressure on the new car market and to debar by every fiscal means open to the Treasury the desire of people to continue to use their old cars—and that at a time when, with another part of Treasury policy, the supply of new cars to that market was reduced.
The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) asked what the cost of this concession was going to be. I am told the reason why there are more old cars on the road paying the old horse-power tax is chiefly due to the Ministry of Supply and other Government Departments who have collared the new cars for their own use at controlled prices and who have sold junk at enhanced prices to the public. What are we to think of "fiscal weapons" which are used in entirely opposite directions, not to suit the economic situation, but to suit the arguments of the Treasury Bench?

Mr. Jay: I think the right hon. Member for Aldershot (Mr. Lyttelton) introduced rather more heat than light into the argument. He purported to see some inconsistency between the policy of a 33⅓ per cent. Purchase Tax on commercial vehicles in order that we may divert the supply to the export market, and our maintaining the present system of taxation on passenger cars. But the answer to that is, of course, that we have now in force a 33⅓ per cent. Purchase Tax on passenger cars which naturally falls on new cars only, and, judging by the export record of the motor industry in new cars in the last three years, that Purchase Tax has had a very salutary effect.
The hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) made the very best of his case, as we should expect, but he did not convince me that a case has been made out for making this concession this year. I will give three reasons why he failed to do so. First of all, may I just say this. He quoted again the £23 million of revenue which has accrued to us since the Budget as a result of the derationing of petrol, but he did not metion—though I think the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) did—the fact which my right hon. Friend the Minister of State for Economic Affairs has already explained, that, unhappily, the equivalent burden of extra expenditure has already accrued since the Budget statement was made. The principal items in that are the increased National Assistance scales, the double taxation agreements and one or two other items. Since my right hon. Friend spoke we have, of course, made the further concession of the conversion of the lorry tax to a chassis tax, which will cost a further £3 million this year.

Lieut.-Commander Gurney Braithwaite: I do not want to interrupt the flow of the hon. Gentleman's argument, but is it not the case that the increased National Assistance scales were announced a full fortnight before the derationing of petrol? They were not budgeted for, therefore, because of the windfall.

Mr. Jay: They were announced earlier but were not included in the Budget estimate and were not, therefore, relevant to the calculations then made. I have been asked why it is that the number

of cars licensed before 1947 has increased in the last two years and why the cost of this concession is, as a result, going up. The reason, fairly evidently, is that with the gradual increase in the petrol rationing and, finally, with derationing, many people have thought it more worthwhile to register their cars and put them back on the roads. This has had, however, the rather surprising and unexpected result that the cost of this concession has risen over the last two years and not, as most people foresaw, fallen. The right hon. Gentleman is, of course, totally wrong—I do not know whether he was serious in suggesting it—in stating that the increase in the number of old cars has something to do with the Ministry of Supply buying new cars. That is, of course, an infinitesimal proportion of the total number of cars as I think the right hon. Gentleman knows.
I said that I would give three reasons why this does not appear to us to be the right occasion on which to make this change. First of all, as my hon. Friend the Member for Bolton, West (Mr. J. Lewis) said, the alteration introduced in 1947 was designed not to give relief to some particular section of the taxpayers who were in need of it but to enable the industry to make changes in motor car design which would, it was hoped, result in increased exports. The main purpose, as I think the hon. Member for Edgbaston (Sir P. Bennett) would agree, was to enable the industry to concentrate on fewer types and, therefore, increase its hold on the export markets. Judging by the record of the industry since then, that schemes has been magnificently successful. Of course, for that purpose it was not necessary to alter the system of taxation on old cars. As my hon. Friend the Member for Bolton, West, said, one cannot manufacture an old car any more than one can make next year's speech this year.
If the argument is to be that this change should be made now, it must be argued on a basis of need and not of production and exports. When we shift to that ground we have to make the case that this is the first priority for taxation relief on grounds of need, in competition with all the other claims for relief that there are before us. Secondly, we cannot leave out of the argument the fact that whereas the old car pays a higher annual tax, the new car pays Purchase Tax when it is bought. There is, therefore, some rough


justice between the new car and the old car. I agree that it is rough, but we cannot get perfection in these matters.
The hon. Member for Kingston-upon-Thames quoted a letter in "The Times" on this subject. He omitted to mention two other letters in "The Times" which I think illustrate the fact that there are two points of view on the question of whether it is the owner of the old car or the owner of the new car who is suffering an injustice. I will read the first:
I heartily support the argument"—
of another correspondent—
against the horse-power tax in his letter in your issue of June 15th but I would adduce a further argument against this monstrous injustice. The older the car the quicker it will consume 3s. petrol and the owner is thus penalised twice over, notwithstanding that many, like myself, have had a new car on order for three years or longer.
That letter came from Aberdeen.
The second letter came from London, W.1, and read as follows:
Your correspondent must, in complaining of the 'monstrous injustice' of the horsepower tax, remember the monstrous burden of the purchase tax on post-war cars. The tax, until recently, on the 'fortunate' owner of a post-war Rolls-Royce was about £2,000, and this burden has now been reduced to about £1,000. It will take your correspondent many years to contribute so generously to the Exchequer.
So there are two points of view about this, and each side thinks the other is comparatively suffering from an injustice. Therefore, it is probable on the whole that there is a certain amount of rough justice between the two.

Mr. John Hay: Is the point then that because there is injustice to both sides that should mean justice on the Government side?

Mr. Jay: The hon. Gentleman has not followed the argument. Because each side thinks there is injustice being done to them the probability is that there is fairness between them.
Thirdly, I think the essential argument is this. If we have £6 million to concede this year to one or another section of the community, is this really the first priority claim upon us? I do not believe it is. Indeed, among the many pressing claims for increased Government expenditure which have been laid before us by the Opposition in these last few months and

weeks I can think of quite a number which have as good, if not better, a claim for £6 million of relief. Indeed, the right hon. Member for Bristol, West (Mr. Stanley), whose absence we particularly regret at this hour of the night when he was always at his best, made this point with admirable clarity last year. Speaking of a possible concession of £5½ million—it was this figure then—he said:
… if the Financial Secretary to the Treasury were suddenly to go off his head … and offer me my choice of any object I liked, on which I could secure a reduction of £5½ million per annum, I should not feel able to give this priority."—[OFFICIAL REPORT, 27th June, 1949; Vol. 466, c. 897.]
I agree with the right hon. Gentleman in that pronouncement, and therefore I must ask the Committee to reject this Clause.

Mr. Leather: I should like to answer some of the extraordinary arguments which the Financial Secretary has put to us. In a great display he has taken arguments given in 1947 and chalked them off in 1949, and vice versa. He has also treated us to the extraordinary spectacle of being the only holder of the office of Financial Secretary in the last three years who has tried to defend the tax while his predecessor in former years admitted the anomaly.

Mr. Jay: The hon. Gentleman must not twist my argument as far as that. I never said it was not an anomaly. I said it was not the right year to make a change.

Mr. Leather: I can only suggest to the Committee that that is another example of the hon. Gentleman's rough justice. It seems to be remarkably rough, and precious little justice. He also tried to twist, to use his own phrase, words of the right hon. Member for Aldershot (Mr. Lyttelton), by telling us that the Purchase Tax on cars was a great fiscal weapon responsible for the success of the motorcar industry in reaching its marvellous export figures. That is nonsense. Purchase Tax has nothing whatever to do with it.
12.0 midnight.
The Minister of Supply says, "You export your cars, or else." He does not ask anything about the tax, and if the manufacturer does not export the Minister puts him out of business. To seek to justify the argument that the tax is a


fiscal weapon is nonsense. This is another one of those taxes that come under the heading that the Chancellor of the Exchequer summarises in his own delightful word "disincentive," and particularly to those classes of the community we all want to help.

Mr. Churchill: A non-un-disincentive.

Mr. Leather: I stand corrected by my right hon. Friend. I should like, if I may, with due respect, to get that on the record under my own name—a non-un-disincentive. The Chancellor of the Exchequer tells us a great deal about extra work, incentives to work harder, encourages us to produce more, and tells us to save more. To the skilled worker, the chap on the shop floor who is prepared to work a little harder, is not a car the kind of thing he would like to save for? Why make it difficult, if not impossible, for him? Many people who do make the effort find, when they have had the car a few months, that they have bitten off more than they can chew, and they are in the hands of the finance boys who have the mortgage on the car.
Hon. Members opposite are great people for talking about exploitation and all the rest of it. I work in a factory for my living. I come out of the factory. I have a 12 h.p. pre-war car. I am paying £13 to £15 tax. I cannot afford to buy

another car. The boss drives off in a brand new Bentley or a Rolls, and it only costs him half what it costs me. Who is exploiting whom? I suggest to hon. Members opposite that that cut went home a little bit, because they know how weak that ground is. They are responsible. They are taking the extra money out of the working man's pocket. They are responsible for the disincentive, for the lack of the will and the desire to save. [Interruption.] I am delighted to see that so many hon. Members opposite are going to support us in the Division Lobby.

Mr. Lyttelton: I think it is time we came to a Division on this Clause. In the course of my comparatively short Parliamentary life I have never heard arguments so tenuous as those advanced by the Financial Secretary to the Treasury. He is the only one since 1947 who has attempted to justify a tax of £10 on a new 30-horsepower car and of £30 on a 15-year-old car of the same horsepower. He has given the most extraordinary argument that because the Government have made two mistakes the right thing lies between the two. The whole argument is perfectly nugatory, and the time has come when we should divide.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 269; Noes, 278.

Division No. 44.]
AYES
[12.7 a.m.


Aitken, W. T.
Brooke, H. (Hampstead)
Deedes, W. F.


Alport, C. J. M.
Browne, J. N. (Govan)
Digby, S. Wingfield


Amery, J. (Preston, N.)
Buchan-Hepburn, P. G. T.
Dodds-Parker, A. D


Amory, D. Heathcoat (Tiverton)
Bullock, Capt. M.
Douglas-Hamilton, Lord M


Arbuthnot, John
Bullus, Wing-Commander E. E.
Drayson, G. B


Ashton, H. (Chelmsford)
Burden, Squadron-Leader F. A.
Drewe, C


Assheton, Rt. Hon. R. (Blackburn, W.)
Carr, L. R. (Mitcham)
Dugdale, Maj. Sir T. (Richmond)


Astor, Hon. M.
Carson, Hon. E.
Duncan, Capt. J. A. L.


Baker, P.
Channon, H.
Duthie, W. S.


Baldock, J. M
Churchill, Rt. Hon. W. S.
Eccles, D. M.


Baldwin, A. E.
Clarke, Col. R. S. (East Grinstead)
Eden, Rt. Hon. A.


Banks, Col. C
Clarke, Brig T. H. (Portsmouth, W.)
Elliot, Lieut.-Col. Rt. Hon. Walter


Baxter, A. B.
Colegate, A
Erroll, F. J.


Beamish, Maj T V H.
Conant, Maj. R. J. E.
Fisher, Nigel


Bell, R. M.
Cooper, A. E. (Ilford, S.)
Fort, R.


Bennett, Sir P. (Edgbaston)
Cooper-Key, E. M.
Foster, J. G.


Bennett, R. F. B. (Gosport)
Corbett, Lieut.-Col. U. (Ludlow)
Fraser, Hon. H. C. P. (Stone)


Bevins, J. R. (Liverpool, Toxteth)
Craddock, G. B. (Spelthorne)
Fraser, Sir I. (Lonsdale)


Birch, Nigel
Cranborne, Viscount
Galbraith, Cmdr. T. D, (Pollok)


Bishop, F. P.
Crosthwaite-Eyre, Col. O. E.
Galbraith, T. G. D. (Hillhead)


Black, C. W.
Crouch, R. F.
Gammans, L. D


Boles, Lt.-Col. D. C. (Wells)
Crowder, F. P. (Ruislip-Northwood)
Garner-Evans, E. H. (Denbigh)


Boothby, R.
Crowder, Capt. John F. E. (Finchley)
Gates, Maj. E. E.


Bossom, A. C.
Cundiff, F. W.
George, Lady M. Lloyd


Bower, N.
Cuthbert, W. N.
Gomme-Duncan, Col. A.


Boyd-Carpenter, J. A.
Darling, Sir W. Y. (Edinburgh, S.)
Gridley, Sir A.


Bracken, Rt. Hon. Brendan
Davidson, Viscountess
Grimond, J.


Brains, B.
Davies, Nigel (Epping)
Grimston, Hon. J. (St. Albans)


Braithwaite, Lt.-Comdr. J. G.
de Chair, S.
Grimston, R. V. (Westbury)


Bromley-Davenport, Lt.-Col. W
De la Bère, R.
Harden, J. R. E.




Hare, Hon. J. H. (Woodbridge)
Macdonald, A. J. F. (Roxburgh)
Ryder, Capt. R. E. D


Harris, F. W. (Croydon, N.)
Macdonald, Sir P. (I. of Wight)
Savory, Prof. D. L.


Harris, R. R. (Heston)
McKibbin, A.
Scott, Donald


Harvey, Air-Codre. A. V. (Macclesfield)
McKie, J. H (Galloway)
Shepherd, W. S. (Cheadle)


Harvey, I. (Harrow, E.)
Maclay, Hon. J. S.
Smiles, Lt.-Col. Sir W.


Hay, John
Maclean, F. H. R.
Smith, E. Martin (Grantham)


Head, Brig A. H.
MacLeod, Iain (Enfield, W.)
Smithers, Peter H. B. (Winchester)


Heald, L. F
MacLeod, John (Ross and Cromarty)
Smithers, Sir W (Orpington)


Heath, Col. E. R.
Macpherson, N. (Dumfries)
Smyth, Brig. J. G. (Norwood)


Hicks-Beach, Maj. W. W.
Maitland, Comdr. J. W.
Soames, Capt. C.


Higgs, J. M. C.
Manningham-Buller, R. E.
Spearman, A. C. M.


Hill, Mrs. E. (Wythenshawe)
Marlowe, A. A. H.
Spence, H. R. (Aberdeenshire, W.)


Hill, Dr. C. (Luton)
Marples, A. E.
Spens, Sir P. (Kensington, S.)


Hinchingbrooke, Viscount
Marshall, D. (Bodmin)
Stanley, Capt. Hon. R. (N. Fylde)


Hirst, Geoffrey
Marshall, S. H. (Sutton)
Stevens, G. P.


Hogg, Hon. Q.
Maude, A. E. U. (Ealing, S.)
Steward, W. A (Woolwich, W.)


Hollis, M. C
Maude, J. C. (Exeter)
Storey, S.


Holmes, Sir J. Stanley (Harwich)
Maudling, R.
Strauss, Henry (Norwich, S.)


Hope, Lord J.
Mellor, Sir J.
Stuart, Rt. Hon. J (Moray)


Hornsby-Smith, Miss P.
Molson, A. H. E.
Studholme, H. G


Horsbrugh, Miss F.
Moore, Lt.-Col. Sir T.
Summers, G. S.


Howard, G. R. (St. Ives)
Morrison, Maj. J. G. (Salisbury)
Sutcliffe, H.


Howard, S. G. (Cambridgeshire)
Morrison, Rt. Hon. W. S (Cirencester)
Taylor, C. S. (Eastbourne)


Hudson, Sir Austin (Lewisham, N.)
Mott-Radclyffe, C. E.
Taylor, W. J. (Bradford, N.)


Hudson, Rt. Hon. R. S. (Southport)
Nabarro, G.
Teeling, William


Hudson, W. R. A. (Hull, N.)
Nicholls, H.
Thomas, J. P. L. (Hereford)


Hulbert, Wing-Cdr. N. J.
Nicholson, G
Thompson, K. P. (Walton)


Hurd, A. R
Nield, B. (Chester)
Thompson, R. H. M (Croydon, W.)


Hutchinson, Geoffrey (Ilford, N.)
Noble, Comdr. A. H. P
Thorneycroft, G. E. P. (Monmouth)


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Nugent, G. R. H.
Thornton-Kemsley, C. N.


Hyde, H. M.
Nutting, Anthony
Tilney, John


Hylton-Foster, H. B.
Oakshott, H. D.
Touche, G. C.


Jeffreys, General Sir G
Odey, G. W.
Turton, R. H


Jennings, R.
O'Neill, Rt. Hon. Sir H.
Tweedsmuir, Lady


Johnson, Howard S. (Kemptown)
Ormsby-Gore, Hon. W. D.
Vane, W. M. F.


Jones, A (Hall Green)
Orr, Capt. L. P. S.
Vaughan-Morgan, J. K.


Joynson-Hicks, Hon. L. W
Orr-Ewing, Charles Ian (Hendon, N.)
Vosper, D. F.


Kaberry, D
Orr-Ewing, Ian L. (Weston-super-Mare)
Wakefield, E. B. (Derbyshire, W.)


Keeling, E. H
Osborne, C.
Wakefield, Sir W. W. (St. Marylebone)


Kerr, H. W. (Cambridge)
Perkins, W. R. D.
Walker-Smith, D. C.


Kingsmill, Lt.-Col. W. H.
Peto, Brig. C. H. M.
Ward, Hon. G. R. (Worcester)


Lambert, Hon. G.
Pickthorn, K.
Ward, Miss I. (Tynemouth)


Lancaster, Col. C. G
Powell, J. Enoch
Waterhouse, Capt. C.


Langford-Holt, J.
Prescott, Stanley
Watkinson, H.


Law, Rt. Hon. R. K.
Price, H. A. (Lewisham, W.)
Watt, Sir G. S. Harvie


Leather, E. H. C.
Prior-Palmer, Brig. O.
Webbe, Sir H. (London)


Legge-Bourke, Maj. E. A. H.
Profumo, J. D
White, J. Baker (Canterbury)


Linstead, H. N
Raikes, H. V.
Williams, C. (Torquay)


Llewellyn, D.
Rayner, Brig. R
Williams, Gerald (Tonbridge)


Lloyd, Rt. Hon. G. (King's Norton)
Redmayne, M.
Williams, Sir H. G. (Croydon, E.)


Lloyd, Maj. Guy (Renfrew, E.)
Remnant, Hon. P.
Wills, G.


Lloyd, Selwyn (Wirral)
Renton, D. L. M
Wilson, Geoffrey (Truro)


Lockwood, Lt.-Col. J. C.
Roberts, Emrys (Merioneth)
Winterton, Rt. Hon. Earl


Longden, G. J. M. (Herts, S. W.)
Roberts, P. G. (Heeley)
Wood, Hon. R.


Low, A. R. W.
Robinson, J. Roland (Blackpool, S.)
York, C.


Lucas, Major Sir J (Portsmouth, S.)
Robson-Brown, W. (Esher)
Young, Sit A. S. L.


Lucas, P. B. (Brentford)
Rodgers, J. (Sevenoaks)



Lucas-Tooth, Sir H.
Roper, Sir H.
TELLERS FOR THE AYES:


Lyttelton, Rt. Hon. O.
Ropner, Col. L
Brigadier Mackeson and


McCallum, Maj. D.
Ross, Sir R D. (Londonderry)
Major Wheatley.


McCorquodale, Rt. Hon. M. S.
Russell, R. S.





NOES


Acland, Sir Richard
Booth, A.
Cooper, G, (Middlesbrough, W.)


Adams, Richard
Bottomley, A. G.
Cooper, J. (Deptford)


Albu, A. H.
Bowden, H. W.
Corbet, Mrs. F. K. (Peckham)


Allen, A. C. (Bosworth)
Bowles, F. G. (Nuneaton)
Cove, W. G.


Anderson, F. (Whitehaven)
Braddock, Mrs. E. M.
Craddock, George (Bradford, S.)


Attlee, Rt. Hon. C. R.
Brockway, A. Fenner
Crawley, A.


Awbery, S. S.
Brook, D. (Halifax)
Cripps, Rt. Hon. Sir S.


Ayles, W. H.
Brooks, T. J. (Normanton)
Crossman, R. H. S.


Bacon, Miss A.
Broughton, Dr. A. D. D.
Cullen, Mrs. A.


Baird, J.
Brown, George (Belper)
Daines, P.


Balfour, A.
Brown, T. J. (Ince)
Darling, G. (Hillsbero')


Barnes, Rt. Hon. A. J.
Burton, Miss E.
Davies, A. Edward (Stoke, N.)


Bartley, P.
Butler, H. W. (Hackney, S.)
Davies, Ernest (Enfield, E.)


Bellenger, Rt. Hon. F. J.
Callaghan, James
Davies, Harold (Leek)


Benson, G.
Castle, Mrs. B. A.
Davies, S. O. (Merthyr)


Beswick, F.
Champion, A. J.
de Freitas Geoffrey


Bevan, Rt. Hon. A. (Ebbw Vale)
Chelwynd, G. R.
Deer, G.


Bing, G. H.C.
Clunie, J.
Delargy, H. J.


Blackburn, A. R.
Cocks, F. S.
Dodds, N. N.


Blenkinsop, A.
Coldrick, W.
Donnelly, D.


Boardman, H.
Collick, P.
Donovan, T. N.







Driberg, T. E. N
Keenan, W.
Richards, R.


Dugdale, Rt. Hon. J. (W. Bromwich)
Kenyon, C.
Robens, A.


Dye, S.
Key, Rt. Hon. C. W
Roberts, Goronwy (Caernarvonshire)


Ede, Rt. Hon. J. C.
King, H. M.
Robertson, J. J. (Berwick)


Edelman, M.
Kinley, J.
Robinson, Kenneth (St. Pancras, N.)


Edwards, John (Brighouse)
Lang, Rev. G
Rogers, G. H. R. (Kensington, N.)


Edwards, Rt. Hon. N. (Caerphilly)
Lee, F. (Newton)
Ross, William (Kilmarnock)


Edwards, W. J. (Stepney)
Lee, Miss J. (Cannock)
Shackleton, E. A. A.


Evans, Albert (Islington, S. W.)
Lever, L. M. (Ardwick)
Shawcross, Rt. Hon. Sir H


Evans, E. (Lowestoft)
Lever, N. H. (Cheetham)
Shurmer, P. L. E


Evans, S. N. (Wednesbury)
Lewis, A. W. J. (West Ham, N.)
Silverman, J. (Erdington)


Ewart, R.
Lewis, J. (Bolton, W.)
Silverman, S. S. (Nelson)


Fernyhough, E.
Lindgren, G. S.
Simmons, C J


Field, Capt. W. J.
Lipton, Lt.-Col. M.
Slater, J.


Finch, H. J.
Longden, F. (Small Heath)
Smith, Ellis (Stoke, S.)


Fletcher, E. G. M. (Islington, E.)
McAllister, G.
Snow, J. W.


Follick, M.
MacColl, J. E.
Sorensen, R. W.


Forman, J. C.
McGhee, H. G.
Soskice, Rt. Hon. Sir F


Freeman, J. (Watford)
Midlines, J.
Sparks, J. A.


Freeman, Peter (Newport)
Mack, J. D.
Steele, T.


Gaitskell, Rt. Hon. H. T. N.
McKay, J. (Wallsend)
Stewart, Michael (Fulham, E.)


Ganley, Mrs. C. S.
Mackay, R. W. G. (Reading, N.)
Strachey, Rt. Hon. J.


Gibson, C. W.
McLeavy, F.
Strauss, Rt. Hon. G. R. (Vauxhall)


Gilzean, A.
MacMillan, M. K. (Western Isles)
Stross, Dr. B.


Gooch, E. G.
McNeil, Rt. Hon. H.
Summerskill, Rt. Hon. Edith


Gordon-Walker, Rt. Hon. P. C.
MacPherson, Malcolm (Stirling)
Sylvester, G. O.


Greenwood, A. W. J. (Rossendale)
Mainwaring, W. H.
Taylor, H. B (Mansfield)


Greenwood, Rt. Hn. Arthur (Wakefield)
Mallalieu, E. L. (Brigg)
Taylor, R. J. (Morpeth)


Grenfell, D. R.
Mallalieu, J. P. W. (Hudderfield E.)
Thomas, D. E. (Aberdare)


Grey, C. F.
Mann, Mrs. J.
Thomas, George (Cardiff)


Griffiths, D. (Rother Valley)
Manuel, A. C.
Thomas, I. O. (Wrekin)


Griffiths, Rt. Hon. J. (Llanelly)
Marquand, Rt. Hon. H. A.
Thomas, I. R. (Rhondda, W.)


Griffiths, W. D. (Exchange)
Mathers, Rt. Hon. George
Thorneycroft, Harry (Clayton)


Gunter, R. J.
Mellish, R. J.
Thurtle, Ernest


Hale, J. (Rochdale)
Messer, F
Timmons, J.


Hale, Leslie (Oldham, W.)
Middleton, Mrs. L.
Tomney, F.


Hall, J. (Gateshead, W.)
Mikardo, Ian
Turner-Samuels, M


Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
Mitchison, G. R.
Usborne, Henry


Hamilton, W. W.
Moeran, E. W.
Vernon, Maj. W. F


Hannan, W.
Monslow, W.
Viant, S. P.


Hardman, D. R.
Moody, A. S.
Wallace, H. W


Hardy, E. A.
Morgan, Dr. H. B.
Watkins, T. E


Hargreaves, A.
Morley, R.
Webb, Rt. Hon. M (Bradford C.)


Harrison, J.
Morris, P. (Swansea, W.)
Weitzman, D.


Hastings, Dr. Somerville
Moyle, A.
Wells, P. L. (Faversham)


Hayman, F. H.
Mulley, F. W
Wells, W. T. (Walsall)


Henderson, Rt. Hon. A. (Rowley Regis)
Murray, J. D.
West, D. G.


Herbison, Miss M.
Nally, W.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Hewitson, Capt. M.
Neal, H.
While, Mrs. E. (E. Flint)


Hobson, C. R.
Noel-Baker, Rt. Hon. P. J.
White, H. (Derbyshire, N. E.)


Holman, P.
Oldfield, W. H.
Whiteley, Rt. Hon. W.


Holmes, H. E. (Hemsworth)
Oliver, G. H.
Wigg, George


Houghton, Douglas
Orbach, M.
Wilcock, Group-Capt C. A. B


Hubbard, T.
Padley, W. E.
Wilkes, L.


Hudson, J. H. (Ealing, N.)
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Wilkins, W. A


Hughes, Emrys (S. Ayr)
Paling, Will T. (Dewsbury)
Willey, F. T (Sunderland)


Hughes, Hector (Aberdeen, N.)
Pannell, T. C.
Willey, O. G. (Cleveland)


Hughes, Moelwyn (Islington, N.)
Pargiter, G. A.
Williams, D. J. (Neath)


Hynd, H. (Accrington)
Paton, J.
Williams, Ronald (Wigan)


Hynd, J. B. (Attercliffe)
Pearson, A.
Williams, Rt. Hon. T. (Don Valley)


Irvine, A. J. (Edge Hill)
Pearl, T. F
Williams, W. T. (Hammersmith, S.)


Irving, W. J. (Wood Green)
Poole, Cecil
Wilson, Rt. Hon. J. H. (Huyton)


Isaacs, Rt. Hon. G. A.
Popplewell, E.
Winterbottom, I. (Nottingham, C.)


Janner, B.
Porter, G.
Winterbottom, R. E. (Brightside)


Jay, D. P. T.
Price, M. Philips (Gloucestershire, W.)
Wise, Major F. J.


Jeger, G. (Goole)
Proctor, W. T.
Woods, Rev. G. S.


Jeger, Dr. S. W. (St. Pancras, S.)
Pryde, D. J.
Wyatt, W. L.


Jenkins, R. H.
Pursey, Comdr. H.
Yates, V. F.


Johnson, James (Rugby)
Rankin, J.
Younger, Hon. Kenneth


Jones, D. T. (Hartlepool)
Rees, Mrs. D.



Jones, Frederick Elwyn (West Ham, S)
Reeves, J.
TELLERS FOR THE NOES:


Jones, Jack (Rotherham)
Reid, T. (Swindon)
Mr. Collindridge and Mr. Royle.


Jones, William Elwyn (Conway)
Reid, W. (Camlachie)

New Clause.—(AMENDMENT OF SECTION 4 OF FINANCE ACT, 1949.)

Subsection (1) of section four of the Finance Act, 1949, shall have effect as if the Schedule (Wine (Rates of Customs Duty)) to this Act were substituted for the Second Schedule to that Act.—[Mr. Russell.]

Brought up, and read the First time.

12.15 a.m.

Mr. Russell: I beg to move, "That the Clause be read a Second time."
At this late hour I propose to be brief on the subject of Empire wines, if only for the fact that I have been lucky


enough in the ballot for the Adjournment tonight, and have yet another speech to make. The object of this Clause and the Schedule referred to is to lower the Customs Duty on Empire wines, and thus increase the preference on these wines. The present rate of duty gives a preference of 15 per cent. in the case of light wines and 20 per cent. in the case of heavy wines. That is omitting minor details like additional duties on sparkling wines and things like that. The rates we propose would put a preferential duty of 70 per cent. of the full rate in both cases, which would leave an Empire preference of 30 per cent.
The Empire wine trade has always been vitally influenced by changes in the rates of preference. Usually, when there has been a preference on Empire wines it has been 50 per cent. That is what it was in the seven years before the war. The duty on light wines then was 4s. at the full rate and 2s. at the preferential rate, and on heavy wines 8s. at the full rate and 4s. at the preferential rate. As a result of this preference there was an increase in the proportion of wines imported into this country from Empire sources. Both South Africa and Australia increased their output of wines by 50 per cent. during the years 1931 to 1937.
During the war the duties both on Empire and foreign wines were heavily increased, and as a result the value of the preference was decreased. In 1948, the Chancellor of the Exchequer increased the duties on light wines up to 25s. for the full rate and 23s. for the Empire rate, which left the margin of preference at only 8 per cent. For heavy wines the rates were 50s. and 40s. which gave a more substantial margin of 20 per cent. Last year a concession was made which had the effect of increasing the preference on light wines to 15 per cent. We say that this is not enough in view of the harmful effect on the imports of Empire wines in the last few years. We would like to see the rates of preference increased to 30 per cent. in both cases as a step towards what we hope will be the restoration of the 50 per cent. preference of pre-war years.

Mr. Braine: I am particularly glad to support my hon. Friend the Member for Wembley, South (Mr. Russell) on this proposed new Clause. I will command the approval,

I think, of most hon. Gentlemen on both sides of the Committee when I say that no fiscal action should ever be taken by a British Government which has the effect of restricting trade between Commonwealth countries and ourselves, or of damaging Commonwealth commercial relations. It is a fact that two years ago the imposition of heavy increases in the full duties on wines largely nullified the preferences hitherto enjoyed by Empire wines.
I trust I shall be in order in saying that this proposed new Clause can only be understood against the background of the decline which has taken place in the last two years in the import of Empire wines. I do not wish to weary the Committee with figures, but it is relevant to say that in 1947 Empire wines constituted 44 per cent. of our imports of wines, but by 1949 they had fallen to 26 per cent. The actual decline in volume was from 4,407,091 gallons in 1947 to 1,959,764 gallons in 1949. That represented a decline of 55 per cent. in two years, and it was experienced by all the Empire wine producing countries.
There is no doubt that the prohibitive duties imposed two years ago have had, and are continuing to have, a serious effect upon the Empire wine industry. In this new Clause my hon. Friend and myself are asking for a modest 70 per cent. preferential duty on light and heavy Empire wines. That will give a 30 per cent. preference in each case, in place of the present rates of 15 per cent. on light wines and 20 per cent. on heavy wines We do so for at least two good reasons. The first is that it should be a matter of common concern to hon. Members on both sides of this Committee to see that Empire industries continue to flourish and enjoy their traditional market in this island.
The second reason is a more materialistic one. It is that the main wine producing countries in Europe—France and Spain and Portugal—lie within a comparatively short distance of their market in this country, whereas Empire wine producers have to transport their product across thousands of miles of sea, through varying climates, and, as a consequence, have to bear heavy transportation charges and other costs. For that reason alone I suggest that there should be an increase in preference.
It is a sad commentary—I hope I shall be in order in saying this—that this is the only country in Europe where wine is a luxury. Before the war the ordinary man and woman who liked an occasional glass of wine could buy a bottle of Empire wine for about 3s. and I make a last appeal to the Chancellor of the Exchequer carefully to consider this new Clause, in the hope that that day may return, and return soon.

Mr. Jay: The hon. Gentleman who moved this new Clause was commendably brief and, if I may, I shall be the same. This Clause would, of course, increase the preference for Empire wine compared with foreign wine. That, unfortunately, would be contrary to the Geneva Agreement on trading tariffs, and that, I am afraid, is a fatal objection. I believe that some hon. Members opposite are in favour of even closer economic union with Europe than with the Commonwealth—[HON. MEMBERS: "No."] We are glad to have that assurance, because we also think that there must be some limit to the rate at which one can move in that direction. But we are in favour of keeping treaties which' we have signed with both European and Commonwealth countries. I am sure that hon. Members will realise that Commonwealth countries, including those particularly concerned—Australia and South Africa—were present at the Geneva negotiations, and the agreements reached there were, of course, beneficial in one way or another to all the countries concerned. That being so, I do not think that hon. Members opposite would really wish to push this case tonight.

Mr. Braine: I will not push the hon. Gentleman, but can I ask if representations were not made to him personally by the High Commissioners for South Africa and Australia, and that when they were made he promised consideration? With what result I do not know.

Sir Ian Fraser: Could the Financial Secretary assure us that there is no room within the terms of the Geneva Agreement for any increase in preference on South African light wines, because I thought that, while drastic changes were governed by Agreement, any small change, if he cared to make it, could be made.

Mr. Jay: There is no room for a change that would increase the margins

of preference. There is room, and we took advantage of it last year, to reduce the duty, which had the effect of reducing the price in this country.

Sir H. Williams: I am glad to have heard the revealing statement that we have so tied ourselves up that we are no longer fiscally free. I think that three months is requisite in order to get out—[AN HON. MEMBER: "It has not been ratified."] I know that the Havana Agreement has not been ratified, except by Liberia; but the Geneva Agreement has been. That argument is not good enough, and I dislike the cheap sneers that we on this side were not the chief protagonists of Empire trade. We were responsible for Empire preferential duties, and that had the marked opposition of the Socialist Party. They like to forget that nowadays, as they forget so many of their misdeeds.
The fact is that, as the years went by, these preferences were improved. There was differentiation between the heavy and the light wines, and the fact remains that this is an integral part of the policy which this side has always supported, and which the other side, in days before the war, always opposed—particularly in 1931 and 1932. What we want to do tonight is to restore what we did before the war in the matter of this preference.
At this hour, I do not want to take up the time of the Committee, but I think we should be reminded that Cobden in 1859—[Interruption.] Hon. Members opposite have not heard of Cobden, but I understand that is because he has only one representative left in the House of Commons. I was about to say that in 1859 we had a treaty with France which resulted in wiping out Imperial Preference on wines so that South Africa, which had been exporting 600,000 gallons a year, sent in 20 years later only 20,000 gallons. The wine farmers of South Africa were of Dutch extraction and they were numbered among the voortrekkers who caused so much trouble later on.
Hon. Members opposite are unfamiliar with all these things, but let me remind them that by 1939 we had built up a different position, and it is not unreasonable that we should move this new Clause. I hope that between now and next year the Financial Secretary will take steps to free us of the most hampering


engagement entered into at Geneva whereby we are prohibited from doing a whole lot of things which this country and this Parliament ought to be free to do.

12.30 a.m.

Mr. Eccles: I am not in favour of increasing this Empire Preference unless I am sure that better quality wines will come. I am told by my friends in the Empire that they do produce some very good wine but do not send it to us. I would like to have that good wine, and I would be very grateful to be able to drink more Empire wine. I want to encourage them to send us their good wine. I really am ashamed of the argument put forward by the Financial Secretary. He advances this Geneva Agreement when it suits him, because he says he is tied to the Americans and therefore cannot increase the preference. When he comes to argue over the European Payments Union, whose Government is it says that they must have the right to discriminate to protect their own country? I wish to say, quite definitely, that when it suits His Majesty's Government they advance this Agreement with the Americans. When it does not, in many negotiations—

Sir S. Cripps: This is not an agreement with the Americans.

Mr. Eccles: The argument advanced by the Financial Secretary is that this country, in company with a lot of other countries, has agreed not to increase their preference. In the same Agreement are various Clauses about discrimination—[HON. MEMBERS: "No."]—about nondiscrimination, about the sources from which imports come. When it suits the Government to break these, they do break them, and it is very dishonourable.

Sir W. Darling: I hope, in dealing with this Clause, to suggest that Scotland is in the British Empire and that whisky would come under "Empire wine." [Laughter.] Apparently that would be out of order, so I shall content myself with asking this question. Are we to understand that in future this Committee has no control over such matters with which this Clause attempts to deal; and that already these matters have been settled outwith this Committee, by an arrangement to which this Committee was not a consenting party; and that, in future, arrangements

regarding wine between, for example, ourselves and South Africa, are matters which we cannot usefully discuss? If that is so, it is a grievous position which we should take steps to remedy.

Sir H. Williams: The Chancellor repudiated the statement of my hon. Friend that this was an agreement with the Americans. Surely, everybody knows the Geneva conference would not have taken place but for the American Loan. It was one of the conditions, and the Americans have sought ever since then—

Sir S. Cripps: indicated dissent.

Sir H. Williams: It is no good the Chancellor shaking his head. Everybody knows it. One has only to read the Debate in December, 1945—I was not a Member of the House then, but I read it—to know that the Geneva conference was entirely a consequence of, and was one of the strings attached to, the American Loan, which the Chancellor and his predecessor have wasted. The Geneva conference would not have taken place but for the American Loan. The Chancellor knows that perfectly well, and when he shakes his head he is shaking his head against his own knowledge.

Sir S. Cripps: The hon. Gentleman is completely wrong in everything he has said. I was at Geneva, I took part in all the discussions myself, and I know what the reason and the cause of them was.

Question put, and negatived.

New Clause.—(AMENDMENT OF S. 6 OF FINANCE (NO. 2) ACT, 1947.)

Section six of the Finance (No. 2) Act, 1947, so far as relating to bets made by means of a totalisator set up on a dog racecourse which is a track in respect of which a licence granted under Part 1 of the Betting and Lotteries Act, 1934, is for the time being in force shall have effect as if in subsection (1) thereof for the words "ten per cent." there were substituted the words "five per cent."—[Mr. Ian L. Orr-Ewing.]

Brought up, and read the First time.

Mr. Ian L. Orr-Ewing: I beg to move, "That the Clause be read a Second time."

On this Clause the question of preference in the Imperial sense does not immediately arise, although in another sense it does, arise, because one of the matters we have to consider is the preference


that is given to some other sports and forms of entertainment than are dealt with by this proposed new Clause.

I want to make two things absolutely clear in moving this Clause. First, neither I nor any of my hon. Friends are proposing it with the object of saying that betting should at no stage carry any form of tax. We do not claim that betting should be relieved of all tax, and nothing in this new Clause should be supposed to support such arguments. Nor do we wish to put forward this Clause to amend previous taxation proposals in order to increase betting. Our argument is that at the present time betting, far from being deterred, is being encouraged, and the effect of the existing tax is to divert it from one channel to another.

On the question of preference, we do not base our case or our arguments on jealousy against any other forms of sport or amusement and the tax which they bear, but at the same time one has to take some sort of note of the difference between this tax of 10 per cent. on pool betting and dog-racing and the position as regards horse-racing. Horse-racing is largely, both as regards training, breeding and racing, in the hands of people of quite substantial means; yet dog-racing, from breeding right through training and racing, is largely in the hands of people of very moderate means, and the imposition of a very high rate of tax on dog racing appears to many hundreds of thousands of people to be a discrimination against and a burden laid upon those with lower means of income.

One can carry the examination of the difference between the two sports rather further. The turnover from the dog totalisator between 1947 and 1949 sank from £120 million to £78 million—a 37 per cent. decline in the first year, followed by a 10 per cent. decline. The turnover on horse-racing had increased from 1947 to 1948 by 24 per cent. and declined between 1948 and 1949 by only 1½ per cent. That surely shows that the effect of the tax on the totalisator system in dog-racing imposed in 1946–7 has been a strong deterrent against bets being placed through that system, though not necessarily cutting down the number of bets placed; while horse-racing, free from any totalisator taxes at all, has shown a net increase.

That disproves the argument that there has necessarily been a decline in the public

interest in dog-racing, and that the decline in the number and amount of bets placed through the tote in dog-racing is entirely due to a decline of interest. It is as a result of that decline in the turnover of the totalisator that the large drop in the amount which is contributed to the Exchequer has been brought about. That is a serious matter to the Revenue.

I do not consider that the tax has decreased betting in any way. What it has done is to turn those who previously made their bets on the totalisator away from the totalisator on the dog track, and has diverted their activities to the off-the-course bookmaker. Before this tax of 10 per cent. was imposed none of the off-the-course bookmakers took very much interest in dog-racing, but since the tax has been imposed many of the more prominent bookmakers have not only advertised their interest in dog racing, but keep their offices open late specially in order to cater for this betting which now passes through their hands instead of going through the totalisator. When it passes through their hands it attracts no tax at all, and, therefore, the Exchequer loses the entire revenue which it would receive if the betting goes through the totalisator. In fact, the country suffers as a result of this heavy tax.

The argument is sometimes used that this is the wrong moment to deal with this question because the Royal Commission on Lotteries, Betting and Gaming is sitting. I hope that argument will not be used tonight. The Chairman of the Commission has made it clear that he does not consider it to be the duty of the Commission to deal with the question of the extent and nature of the tax which is imposed on any form of betting. I do not want to bother the Committee with quotations, but I think I should give this quotation. In the Budget Speech of 1949 the Chancellor of the Exchequer used these words:
Consideration of other improvements in the Betting Tax must now await the Royal Commission's report upon the general matter of betting and gambling."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2094.]

Since the Chancellor had used those words the Chairman of the Royal Commission said:
While we consider it our duty to consider the principle involved in the taxation on betting and the effect of taxation on the extent of betting, the purely fiscal aspect of taxation, whether a higher or lower rate is practicable


or desirable in a particular case, is in the opinion of the Commission a matter for His Majesty's Government and not one on which the Commission is called on to make any recommendation.
Thus the argument that we should not deal with this question while the Commission is sitting does not hold water.

The 10 per cent. tax is squeezing—and in many cases has already squeezed—the greyhound totalisator system, and the amount of revenue it produces to the Exchequer, into the field of the law of diminishing returns. I claim that it is the duty of the Government to restore that field from which revenue is derived. The direct effect of this tax on greyhound racing and on the different courses is not always appreciated. It is claimed—and I think there is sufficient evidence to prove the claim—that as a result of the tax five racecourses have resigned from the Greyhound Racing Society.

That might sound as if it were not something really important, but when a course resigns from the society they do so for this reason: that their revenue from and through the totalisator is not sufficient to enable them to maintain the standards insisted upon by the Society. These standards include, not only the standard of racing, and so on, but the standard of security as well.

Nothing could be worse for the public, or any form of entertainment, than that the standard of security should be lowered below the point essential for the racing to be straight. It is absolutely essential that racing should be carried out straight, and that evil-doers should not have access to the dogs or any form of machinery connected with the racing. This point cannot be neglected. In addition, 26 of the smaller courses have closed down the totalisators altogether.

12.45 a.m.

I have already stated that it is sometimes said that the decline in revenue from the totalisators is the result of greyhound racing having become up-popular. That can be disproved by the following figures. The cash receipts from the attendances at greyhound racecourses has been practically constant between 1947 and 1949. In fact, it has increased slightly toy about 5 per cent. The numbers who have attended the meetings, far from remaining stationary,

have increased by three million, or 13 per cent., between 1947 and 1949. This is a very considerable increase which entirely disproves the assertion that this drop in revenue through the totalisator is a result of racing having become unpopular.

I hope that point will receive due attention, because it hardly shows that the sport is becoming unpopular. If one considers all sources of revenue of the tracks, the admission money and so on, and the statuory deduction of 6 per cent. from the totalisator, the proportion of the admission money to the amount deducted from the totalisator will reflect the truth or otherwise of the argument that the sport as a whole has become unattractive, and whether any decline has been the result of the increased tax. The proportion of admission money in the total revenue has increased from 28 per cent. in 1947 to 39 per cent. in 1948, which is additional evidence that the argument that it is not the tax which is responsible for the fall of revenue, but rather unpopularity, is completely unjustified.

The tax was not introduced—and the Chancellor of the Exchequer said so at the time—for the purpose of squeezing greyhound racing out of existence. In fact, when he introduced the tax he said:
It is a charge which we believe will not unduly handicap them, but if it proves in the event that it does so, then we must try to lighten it by putting another load on somewhere else."—[OFFICIAL REPORT, 25th November, 1947; Vol. 444, col. 1918.]

This is now the time when that burden should be lightened. I am not pleading in the interest of greyhound racing alone but because by the imposition of this tax a fruitful source of revenue has been brought into the field of the law of diminishing returns, and I believe it is necessary to lower this tax if the decrease in revenue is to toe checked.

Mr. Jay: The hon. Gentleman gave us a lot of interesting information, but he did not sound as though he had very high hopes of the Government accepting this Clause. I must tell him straight away that as it would cost between £4,000,000 and £4,500,000 altogether, with the corresponding reduction that would have to be made in the bookmakers' tax, we do not regard it as one of our first priorities this year. Two main grounds could be given for the reduction of this tax, if one wanted to argue it. One


would be that a fall has taken place, as the hon. Gentleman said, in the revenue, and it is being endangered as a source of revenue in the future. Secondly, it could be argued that the present system of taxes on betting discriminates unfairly against the dog racecourse in comparison with the horse racecourse.
As to the first, it is true that there has been a fall in revenue from totalisators, and incidentally a corresponding fall in the bookmakers' returns also. I do not believe, so far as one can judge, that it is primarily due to the tax, or indeed to the alleged unpopularity of this form of entertainment. It would appear much more likely to be due to the general decline in spending on entertainments and activities of this kind that has been apparent over the last two or three years, and is most probably due to the fact that there have been more of other things, such as clothes and food on which people could spend their money.

Mr. Ian L. Orr-Ewing: If the hon. Gentleman takes that line, how does he account for the net increase between 1947 and 1949 of some 23 per cent. in the takings through the horse-racing tax?

Mr. Jay: It does not necessarily follow that, while a general decline is going on, there may not be some relative shift between one activity and another. I agree this is a matter of opinion, and that one cannot finally prove what is the cause one way or the other. It is also true, as far as the decline in activity on the dog tracks is concerned, that it has been slacking off in recent months. A number of totalisators were closed down at the time the bookmakers' tax was introduced, but in the 12 months ended 30th April one new totalisator was opened and only four were closed. The evidence, therefore, rather suggests that there is no headlong decline in the revenue from this source at the moment.
As to the argument of discrimination, it is true, and has always been admitted, that the present system of taxes on betting is somewhat lop-sided. The reason is that the only practical way of raising revenue in the circumstances in which the duties were introduced was the arrangement which is in force. The hon. Gentleman said he hoped we would not use the argument about the Royal Commission on Lotteries, Betting and Gaming, but when the case is put on the

ground of the present discrimination—if it is called that—I should have thought that the existence of the Royal Commission is plainly relevant, because if any major changes are to be made in the system of betting taxes we feel that it is necessary to await the report of this Commission, and to see the general survey of the facts which the Commission is likely to give us.
It is true that it is not within the terms of reference of the Commission to suggest what rates of taxation should be imposed by the Government, but it is the task of the Commission to survey the field generally, and to provide the Government and the country with background information, in the light of which it should be possible to judge this question of taxation. Because the decline in revenue does not appear to be precipitate, and for those other reasons, we do not think that a case has been made out to regard this as a first-rate priority this year.

Mr. J. Enoch Powell: I am surprised that the Financial Secretary should have opposed this Clause on the ground that it would place a burden on the Treasury and would mean a loss of revenue, because this is one of the few new Clauses whose object is to increase the revenue accruing to the Treasury. I shall direct my remarks in support of my hon. Friend the Member for Weston-super-Mare (Mr. Ian L. Orr-Ewing) to that narrow point, for in supporting this Clause I express no opinion about this form of sport, nor about the desirability of betting in general, nor of the State deriving revenue from a tax upon betting. I do assert, however, that if we are taxing betting it is irrational to tax it at such a level that the revenue obtained is less than if it were taxed at a lower level.
If one can make out a reasonable case to show that the level at which greyhound totalisators are taxed is reducing the revenue derived from that source, then the Treasury Bench have no logical alternative to accepting this Clause. In our view, there is nothing sacrosanct in the 5 per cent. which is written into this Clause, and if the Chancellor of the Exchequer expresses his willingness to reduce the totalisator tax from 10 per cent. to some other figure lower than 10 per cent., which his advisers consider would


result in increased revenue, then I am sure my hon. Friend would be prepared to withdraw this Clause in anticipation of a Government Clause to that effect.
The object of the Clause is to bring down the level of greyhound totalisator taxation in such a way as to increase the revenue derived from that source. I will not repeat the figures which have already been given by my hon. Friend, but I want to remind the Committee of the salient facts. They are that attendances at these tracks have steadily and substantially increased in the last three years, while on the other hand, the totalisator turnover has abruptly fallen between 1948 and 1949, and again in 1950. I think the Financial Secretary was, in fact, mistaken in saying that the early months of 1950 showed a reversal of this downward trend. I am advised that the revenue in the first eight weeks of 1950 was £25,000 less than in the corresponding first eight weeks of 1949.
We are, therefore, facing an upward trend in attendances and an abrupt downward trend in the receipts from the totalisator, which might be due, as the Financial Secretary said, to a variety of reasons He suggested that it was because people were spending more on food and clothing, and because his right hon. and learned Friend's disinflationary policy was bearing fruit. If that is the case, how is it possible to account for the increase in the totalisator receipts on horse-racing courses over the same period? I suggest that, looking at these facts, the increase in the attendance and the great fall in the totalisator receipts while during the same period horse-racing totalisator receipts—

Mr. Keenan: Is it not true that last year it was announced that there was a reduction in the amount that went over the horse-racing totalisator?

1.0 a.m.

Mr. Powell: That is so. In 1949 as against 1948 there was a fall in horse-racing totalisator receipts of 2 per cent., but there was a fall in greyhound racing totalisator receipts of 10 per cent. during the same period. If we go back to the previous year, there was an increase of 25 per cent. in horse-racing totalisator receipts to offset a 27 per cent. decrease in the case of greyhound racing.
Substantially, we have this picture: an increase in horse racing and a decrease in greyhound racing totalisator receipts. The real explanation has nothing to do with disinflation and people spending more on food and clothes, but is simply the effect of the 10 per cent. tax imposed at the beginning of 1948. It seems to follow from that that if a less severe tax were imposed, we should find greyhound racing totalisator receipts increasing and the share going to the Revenue would either be the same or would actually rise. I therefore, ask the Financial Secretary to look again at these facts, which to my mind are convincing, to see whether they do not make out a case for reducing the rate of taxation, not necessarily to 5 per cent. but to an actuarially ascertained figure to preserve and increase the revenue without penalising what is the sport of many millions of people.

Question put, and negatived.

New Clause.—(VALUATION OF INDUSTRIAL BUILDINGS, ETC., FOR ESTATE DUTY.)

Where industrial buildings (as defined by section eight of the Income Tax Act, 1945) plant and machinery are valued as assets for the purpose of assessing estate duty, the scale in accordance with which duty is to be charged on such value shall be the same as that applicable to the agricultural value of agricultural land under subsection (1) of section twenty-eight of the Finance Act, 1949.—[Sir W. Wakefield.]

Brought up, and read the First time.

Sir Wavell Wakefield: I beg to move, "That the Clause be read a Second time."
The purpose of this Clause is to give financial relief where the death takes place of the principal of a small private business, partnership or private company controlled by one person. Sections 46 to 59 of the Finance Act, 1940, provide for valuation by assets for the purpose of Estate Duty. This type of valuation may bear hardly on a family. Where the owner of a controlling interest dies, and the valuation of his business made on assets might amount to £100,000, it might happen that the business had been making small or no profits, and when put up for sale to realise cash for the payment of Death Duties it might bring in only £50,000 or £60,000. This Clause does not apply to public companies and private companies not controlled by one person. In their case, Estate Duty is


calculated in share valuation and not on assets.
I am asking for sympathetic consideration for the Clause, because I think it is contrary to the national interest that businesses should be sold up resulting in a complete change in the essential character and direction of the whole concern. It is surely wrong that a proprietor fearing that at death something of this kind should take place, should have to put his business up for sale and that he should have to find cash to provide for his family before his death. It is also wrong that a man whose whole attention ought to be concentrated on the running and operation of his business should have to have a personal anxiety in what is to happen to his family when he dies.
The imposition of Death Duties at their present heavy scale, I suggest to the Committee, is onerous on manufacturing businesses, because in such businesses there are usually large fixed assets required for the business—factory buildings, plant, and machinery as well as current assets. It is very often impossible to liquidate such fixed assets, as easily as current assets in a trading business can be liquidated. We all know that there are inflated prices at present and, therefore, that additional capital is required for the replacement or modernisation of equipment and machinery.
I hope that the Solicitor-General will convey to the Chancellor of the Exchequer my suggestion that a committee of inquiry be established to go into the whole situation. I hope that such a committee, if set up, would inquire into the effect on small businesses and firms of the present heavy and penal taxation. I believe that if such a committee of inquiry was set up, and the facts were obtained, it would cause anxiety to the Government, because I think it is—

The Chairman: There is no mention of the committee in the new Clause.

Sir W. Wakefield: I will not pursue the point about setting up a committee. I was only suggesting that it was one of the ways by which the facts could be established if there was any question of a dispute about the points I am raising.
What I wish to emphasise is the importance to the national economy of the medium and small-sized businesses

and private companies. Much of our export trade and business is done by this kind of concern, and the value of the family business tradition, with its skilled knowledge and close personal contact between management and workers, is a national asset which ought to be preserved and not destroyed. I suggest that everything ought to be done to encourage and help this kind of business instead of the opposite, which now happens.
The value of this kind of business to the nation was shown during the war, when the importance of having small units, flexible and able to turn their productive capacity to the needs of the nation, was amply demonstrated. Unless this penal taxation ceases these small firms will not be able to exist. That is the purpose of this Clause, because with penal Estate Duties we shall not get a development of great and successful firms from small beginnings, such as we have had within the last 50 years. With these high rates of Death Duties and taxation it is no longer possible to plough back profits into reserves to enable Death Duties to be paid and the business to continue under the same management.
The proposal in the new Clause would mitigate this burden upon industry. The proposal has a precedent. In 1925, when the Death Duties were increased, agricultural land was exempted from the increase, so as to maintain in the agricultural industry the capital invested in it. I am suggesting that the exemption from increased duties thus accorded to agricultural land has been maintained, so that the rate of death duty has been at 55 per cent. of the general rate. I would like to suggest that the working equivalent to land of the private manufacturer is his factory plant and machinery. These assets have already been defined for Income Tax purposes, and from an administrative point of view there should be no difficulty in the working of this Clause. I conclude by asking for the Government's most sympathetic consideration of the Clause. By acceding to it, I believe they will help to preserve a great national asset instead of destroying such assets, which is the case under the present legislative position.

Mr. Odey: I do not propose to detain the Committee very long tonight on this point, but I do not think that the Chancellor of the Exchequer,


when he increased the Death Duties last year, realised the effect which the increase would have upon the economy of this country. I am not concerned this evening with the position of the individual in relation to the Death Duties, but I would like to remind the Committee that two-thirds of the industrial activity of the country is represented by small concerns which are privately owned—private companies or partnerships, or individual businesses.
Let me take as an illustration an estate which is a company, and which is worth £120,000. The head of that company, who owns 80 per cent. of that concern, dies. It is probable that the cash immediately available in that concern is £15,000. For Estate Duties that estate is called upon to pay the sum of £50,000. That means to say that that private company, which has been built up very largely, I have no doubt, by the efforts of the man who has died, has to be realised suddenly.
It is the submission of my hon. Friends and myself that the effect of this legislation, of these high rates of Death Duties, will be to break up private companies which have been the foundation of the economic prosperity of this country. The sooner this point is brought home to the Chancellor of the Exchequer, the better it will be for the future prosperity of the people of Britain. What we propose in this Clause is that in a case of that kind the estates should be treated as agricultural land is treated in a similar case.
1.15 a.m.
The reason for this Clause is that out of these high Estate Duties, the position of the private companies has become precisely the same as the agricultural estate; and what we are seeking is that the plant, and assets, of these private companies should be treated in the same way as agricultural land. The valuation of agricultural land has been unchanged since 1925 and, as a result, is assessed at 55 per cent. of the general rate. We ask for similar treatment for the plant, premises, buildings and estates of private companies.

The Solicitor-General: I am sorry to say that I cannot advise the Committee to accept this proposal. The hon. Member for St. Marylebone (Sir W. Wakefield)

referred to Sections 46 to 59 of the Finance Act of 1940 and, by that reference, I assume that he intended to deal with Section 55, which provides for the special net assets basis for valuation—the assets of small companies. This Clause proposes that the assets of these small companies and partnerships should be valued at very nearly as low as half as that applicable in other cases for estate duty purposes. This Clause wants a valuation as in the case of agricultural property, and that, as I have said, is practically half the rate.
The assumption put forward is that these small companies are of such preponderating importance in the national economy—it was put as representing two-thirds of the national industrial activity—and that, owing to the Estate Duty on which their plant and machinery was based, they are being driven out of business. I cannot accept that assumption. I am informed that, so far as their importance in the national economy is concerned, something less than 10 per cent. of the total industrial profit belongs to this group; the small and medium-sized "family" businesses. I am referring to businesses making between £2,000 and £10,000 a year. If one takes that group, then something under 10 per cent. of the total volume of industrial profits belongs to it. There is a long-term tendency for industry to be concentrated in the hands of large public companies.
We are talking simply about Estate Duties, and there is little evidence that this, in any appreciable sense, is accelerating the process. What is causing it is that the degree of capitalisation in industry is growing ever greater, in terms of the amount of capital employed per worker, and private companies cannot command the volume of capital required on the present scale of capital industrialisation. A number of these small companies are having outside capital brought in to provide the needs of modern industry.
If one is looking at the position from a purely tax point of view, there is another tax provision in the tax code which has a much greater influence upon them than the Estate Duty valuation basis. That is the provision in the 1922 Act which says that if a company—broadly speaking, a one-man company—controlled toy not more than five persons does not distribute a reasonable amount


of its profits, the profits are treated for Surtax as income of the persons interested. Everybody is familiar with that provision. It is because of the provision that if a private business is very successful and expands, it is, in the long run, converted into a public company, because it is only by converting it into a public company that the obligation to pay Surtax upon the undistributed profits of the company can be avoided. No doubt, so far as the tax position is concerned, that would result in a tendency for private companies gradually to be converted into public companies.
So far as the economic reasons are concerned, I stated, a little earlier, that private persons, generally speaking, cannot, from their own resources, command the necessary volume of capital to capitalise their resources on a scale appropriate to modern conditions. That being the answer which I make to both the reasons advanced in favour of these proposals, there remains very little to commend them. It is a rather sweeping proposal practically speaking, to halve the Estate Duty chargeable upon the assets of the small companies.

Sir W. Wakefield: The Solicitor-General is under a misunderstanding, I think. It is not suggested that the rate of duty as applicable to agricultural land should apply to the whole of the assets of these partnerships or private companies, that is to say, the current assets, stock-in-trade, and all the rest. It is only proposed to apply such reduced rate of duty to industrial buildings, to plant, and to machinery.

The Solicitor-General: I do appreciate it because the new Clause clearly specifies it. The proposal relates only to industrial buildings, plant, and machinery. If I seemed to imply that it extended further, then my language was ill-chosen. Even applied, as it does, to the buildings, plant, and machinery—the fixed assets of these small companies—the suggestion that the Estate Duty on them should, broadly speaking, be halved is a very sweeping one and no case could be made out for that special provision in the case of these small companies.
Agricultural land has been valued on a different basis for many years past for special reasons. But no such reasons exist in the case of the small companies to which we have been referring.

There is a general tendency for them to be enlarged into large-scale public companies. That is a tendency which will not be really affected by this proposal and I think the Committee ought to reject it on the grounds that no case can be made out sufficiently strong for this special treatment of the assets, or those parts of the assets of the small companies we have been discussing.

Mr. Selwyn Lloyd: I make no apology for speaking, because I do not consider it is my fault that we have to discuss a complicated matter of this sort at 1.25 in the morning. This is really a matter of some importance. Although I agree, in some ways, with what the Solicitor-General says, I am disappointed he does not seem to appreciate the gravity of this problem. One of his hon. Friends, the Member for Edmonton (Mr. Albu), earlier in the day, talking on the Profits Tax, said that the smaller companies were in a rather special case. I am sorry to hear that the Solicitor-General does not take that view. He does not seem to appreciate the seriousness of the problem facing many small businesses.
One reason he gave for taking no action seemed quite deplorable—the fact that small companies were having constantly to expand into larger businesses. He seemed to think it was a good thing, and he was quite prepared to permit it to continue. I think that is a bad thing, because the more small businesses there are the better. There is really a very serious problem here. I have a constituent who came to see me about a particular case, and who said that it would be quite impossible to realise, for the shares in his company, on a forced sale, anything like the break-up value. That man knew that when he died—and he was over 60—the business must be broken up. I do not think that that is a good thing for businesses or the people employed in them or the country.
The effects of the 1940 Act have gone far beyond what they were intended to go owing to changed circumstances and the incidence of taxation. I therefore hope that the right hon. and learned Gentleman will give us some comfort and will cause some consideration to be given to the very great difficulties which many of these companies face. [Interruption.] I gather that the levity below the Gangway is not directed at my arguments, but at


some of my colleagues. Most of the hon. Members opposite seem to be more or less awake, which is perhaps just as well. I seriously ask the right hon. and learned Gentleman to give at least an undertaking to have this matter examined.

Lieut.-Colonel Sir Walter Smiles: I would just like to call the attention of the Committee to one example. The argument of the right hon. and learned Gentleman did not convince me at all. A man I know very well, who has been in business in Blackburn and in Northern Ireland since he was 20 years old, called on me about three weeks ago and said it was proposed that he should turn his business into a public company. He said, "I do not want to do that. I have a family of two sons and two daughters and I would very much sooner keep this business as a private business. The Estate Duties prevent my doing such a thing and it is necessary now, if these duties are to be paid when I die—and I am just over 60—that I make provision for my family."
That is one business that I know very well and the Clause that my hon. Friend the Member of St. Marylebone (Sir W. Wakefield) has moved certainly fits exactly what that man told me. I believe it would be a very dangerous thing if all these private businesses were swept away. I know several of them, such as big textile machinery manufacturers who export all over the world, and their shareholders' and directors' meetings consist of exactly the same people. I feel it would be a very bad thing for the economy of this country if everyone goes into a big limited liability company that does not "feel" anything and the smaller private businesses are swept away.

1.30 a.m.

Mr. Lyttelton: I hope the Solicitor-General will give us an undertaking that he will look again at the matter, which he has really dismissed much too lightly. Two things are happening now with small businesses, and the first one is this. Take the case of a man with his money invested in a £100,000 business. With his earnings taxed he might get, with his family, £2,500 a year, but if he sells the business and severs his connection with it he has £100,000 free capital. Thus the pull against people remaining in the

family business and towards their selling is becoming ever stronger. On top of that we have the very serious matter of Estate Duties which cause the companies to be broken up and, as sales are forced, they are often sold at quite a small fraction of the break-up value. It is difficult to prolong a discussion at 1.30 in the morning, but the right hon. and learned Gentleman has shown that the Government have no appreciation of this very serious problem.

Mr. Erroll: I should like to impress on the Government the importance of looking at this matter seriously. They are obviously not in a mood to accept the Clause, but I would assure the right hon. and learned Gentleman that this is a serious matter for a number of small businesses. On almost every occasion when a new public issue is made, converting a private company into a public company, the reason given is the problem facing the family because of anticipated Death Duties. It is a serious matter that the whole character of a prosperous small business should be altered on the death of either the owner or the principal proprietor. The situation arises largely through the incidence of Death Duties. The fact that these small companies may represent only a small proportion of the total profitability of industry in this country is nothing by which to judge. They are a valuable element in our industrial complex: they should be encouraged, not trampled down by lack of foresight by the Government.

Sir W. Darling: The Solicitor-General has impressed me with the idea that it is the desire of the Government to accelerate the closing of small businesses. He seemed to think that there was a degree of inevitability about this process, and was rather inclined to encourage it. That is a deplorable thing. Although they make up only about 10 per cent. of the national balance sheet they are an important part. There is an intimate relationship with the staff; in many cases members of the staff have become directors or private shareholders. These businesses are of a very different character from the large corporations and they should be encouraged. The small business of today may well become the large business of tomorrow. The Government should encourage the greatest variety of businesses dealing with every aspect of


production throughout the country, under a personal leadership.
The Government have expressed the view that fiscal policies should be used as controls, but I cannot believe that they have deliberately determined to use the fiscal policy to break up the small businesses of the country. They seemed to say, "It is inevitable that these small businesses should be destroyed, so let us hasten the day by refusing to accept this Clause." In effect, they advise people like myself to realise our capital, to sell a business which, say, brings in £10,000 a year and to take £100,000 capital and to live extravagently without caring what happens in the future. As my hon. and gallant Friend the Member for Down, North (Sir W. Smiles) has discovered, people of my age are encouraged to do that.
Surely the last thing the Government would want to tell the small shopkeeper, the small industrialist, the small manufacturer and his employees is that they are determined to squeeze them out of business as quickly as they can manage it. I hope that no such message will go from the Treasury Bench this morning and that the Government will look at the situation again, will call before them a dozen or so people in these circumstances and will reach a different conclusion.

Colonel Crosthwaite-Eyre: I cannot let the right hon. and learned Gentleman's speech pass without challenge, because his argument was based on two points which were incorrect. First, he said the real issue was not to do with Death Duties but to do with the fact that the small businesses could not raise the necessary capital. His second argument was that under the 1922 Act no small business could carry on because it could not retain profits because they would attract Surtax. In effect, the right hon. and learned Gentleman wrote off the whole of our arguments by drawing these two particular red herrings across the trail.
When he makes those statements he must make them with authority. Is it not a fact today that the banks have lent more to industry than in any other period in our commercial history, and that it has never been so possible for small businesses to get credit? If the right hon. and learned Gentleman insists on his statement will he please say in

how many cases small businesses have not been able to carry on because they could not get the necessary working capital? I challenge him to produce any case or evidence to substantiate what he said. I challenge him, and I do not mind saying that he cannot do it.
Can the right hon. and learned Gentleman now state whether there is any case where the 1922 Act has destroyed a small business and made it go into either a public company or amalgamate with a joint store? The two arguments he has produced are entirely fallacious and he cannot substantiate them with one single instance. They are typical arguments produced by the Treasury Bench when they want to avoid a matter of great principle. They try with great skill to drag in any exterior argument which they cannot substantiate. I think it a great pity that a Law Officer, a man whose judgment should be respected, makes use of arguments which he knows he cannot substantiate when challenged.
The real issue, and a simple one, is that if we do not have some such Clause as this we shall find that in all small towns and market communities family businesses and individual enterprise will die out. More and more of these towns will become the preserve of the Co-operative Society and Marks and Spencers. I hope the Solicitor-General or the Minister of State will now produce some more valid arguments than we have heard so far.

Question put, and negatived.

New Clause.—(AMENDMENT OF S. 33 OF INCOME TAX ACT, 1945.)

Subsection (1) of section thirty-three of the Income Tax Act, 1945, shall be amended by the omission of the words "and each of the succeeding nine years of assessment equal to one-tenth of that expenditure," and by inserting the words "equal to one-fifth of that expenditure and to each of the succeeding eight years of assessment equal to one-tenth of that expenditure."—[Mr. Vane.]

Brought up, and read the First time.

Mr. Vane: I beg to move, "That the Clause be read a Second time."

This Clause is more technical than spectacular, but the section of the Income Tax Act of 1945 to which it refers is important since it covers taxation reliefs relating to the agricultural expansion programme in respect of expenditure


on fixed equipment. The new Clause has two merits which should commend it to the Chancellor of the Exchequer. It is not costly, and it makes no claim for new reliefs. All it does is to shorten the period over which the existing reliefs may be claimed, and puts an added relief on the first year.

It is based on the same considerations as those on which the Chancellor of the Exchequer based his revenue last year on allowances for expenditure on agricultural machinery. The task in front of British agriculture today is mainly how to increase production from poorer land. First and foremost, we must increase expenditure on fixed equipment such as roads, drainage, and houses, without which other expenditure will be reduced in value. The present rates do not offer sufficient encouragement to ensure that all these improvements are undertaken in the proper and best order. I submit that the proposals in this new Clause do improve the position, and are in fact, aimed to put this right.

The Solicitor-General: I would advise the Committee not to vote for this new Clause. It proposes that the initial allowance for farm buildings and similar buildings on agricultural land should be doubled. The increase in the initial allowance for industrial plant and machinery, which was introduced last year, is, after all, enjoyed just as much by farmers in respect of machinery they wish to acquire as by industrialists of any sort, so they have already received a substantial measure of relief.
The rates of allowances applicable to farm buildings are, under the Income Tax Act of 1945, 10 annual allowances of 10 per cent. That is to say, the life of the building is written off over 10 years. That is a very generous rate of allowance. It is much more generous than the allowance on industrial buildings which is 10 per cent. as an initial allowance, and 45 annual allowances of 2 per cent. The life of agricultural buildings is generally speaking much more than 10 years.

1.45 a.m.

The question is whether in those circumstances there can be said to be a case for further increasing the advantageous allowances which they at present

have. I hope the Committee, when they have taken into account the situation of the farmer vis-à-vis other producers, will agree that the farmers cannot be said to have a sufficiently strong priority for an increase in the advantage which they at present get from the allowances applicable to farm buildings under the Income Tax allowances of 1945.

Mr. York: As usual at this time of the night we are disappointed with the brain work of the Solicitor-General. He does not appreciate the point. The real purpose of this Clause is not to increase the allowances; there is no increased allowance in this new Clause. What we are doing is merely shifting the present allowance so as to bring the emphasis on to a particular place for a particular purpose. The purpose is, if possible, to increase the provision of capital equipment in the early stages of the expansion campaign.
As my hon. Friend the Member for Westmorland (Mr. Vane) pointed out, we put forward this purely as a technical improvement so that we could help the Government to carry out their own policy. One would think in circumstances like that that one might receive from one of the Ministers of the Crown some more understanding answer than we have received from the Solicitor-General. Where the new Clause would help most would be in those areas where it is most difficult and certainly uneconomical to provide additional or new capital equipment, as on upland farms and so on. I am very disappointed that, for the second new Clause running, the Solicitor-General has entirely failed to appreciate the point that is being put to him.

Question put, and negatived.

New Clause.—(AMENDMENT OF TENTH SCHEDULE TO THE FINANCE ACT, 1948.)

Sub-paragraph (2) of paragraph 5 of the Tenth Schedule to the Finance Act, 1948, shall be amended by adding at the end of the fifth line the following words "or which were companies under the same beneficial ownership conducting separate stages or departments of what was in substance one trade or business.—(Mr. Touche.]

Brought up, and read the First time.

Mr. Touche: I beg to move, "That the Clause be read a Second Time."

This new Clause is a rather technical one, but it has the merit of raising rather a short point. It does not affect many taxpayers, but it is a question of simple justice for at least one of my constituents. The purpose of Schedule 10 of the Finance Act, 1948, was to exempt from Special Contribution full working directors in private controlled companies. This relief applies to the case of a director working for two or more companies forming a group, and where a number of miscellaneous companies are kept together solely by the presence of a holding company.

In the case I have in mind, the business consists of the manufacture and sale of electricity cables. One company manufactures and transport them for sale to the other company, and half shares in the business are held by the same full-time working director, who has no other business. He therefore works entirely for this business. The Board of Inland Revenue hold that the personal work of the director has no right to relief because the two companies do not form a group. I submit this is hardly carrying out the undertaking given by the Solicitor-General on 22nd June, 1948, when we discussed this matter on the Report stage of the Finance Bill, 1948. He then said:
Where we find a person in a group of companies who gives substantially the whole of his time to the service of the group—we will endeavour to give him the relief to which the Schedule affords."—[OFFICIAL REPORT, 22nd June, 1948; Vol. 452, c. 1304.]

It has been held by the Inland Revenue that this relief cannot be given where there is only in substance one business and the two separate stages are carried out by different companies. This is essentially a case intended to be covered by the exemption given by the Schedule. There seems to me no equitable reason for refusing the relief in this Clause. It carries out the assurance given by the Solicitor-General and I hope the Government will accept it. It will mean justice for one of my constituents and help to make the Solicitor-General an honest man.

The Solicitor-General: When we were discussing the Special Contribution, it was represented that directors who gave their whole time to a company which was virtually their own family company should

be allowed to treat dividends from that company as earned income and therefore free from the operation of the Special Contribution. We applied that first to full-time working directors of director-controlled private companies. That was how we sought to define the kind of company we had in mind. We thought it analogous to the personal trading undertaken by a director under circumstances in which it would be right to treat the dividends of a company as his earnings.
Then it was represented to us that directors might give the whole of their time to more than one company. For that reason we sought to expand a single company into a group of companies. I frankly recognise that when one tries to encircle a group of companies, there are bound to be cases just outside. I am afraid this is one of these cases. When we expanded the definition of the company we tried to make it clear what we were putting inside the circle and what outside. We laid down that each of the companies must be a private company, not an investment company, in which the directors had a controlling interest; that the companies must be either a holding company and one or more subsidiaries or subsidiary companies of the same holding company; and that the directors must work full time in the actual management and control of the companies taken together.
The situation which the hon. Gentleman who moved this new Clause described was not one in which it could be said there was a group. Certainly the two companies were connected; but when we formulated the definition we had to be clear in our own minds what we were putting in. The case the hon. Gentleman instanced of his constituent is clearly outside the definition. The Special Contribution was imposed some two years ago and operated for only one year, and I feel it would be unreasonable now to ask us to reconsider that definition, which was fully discussed when we formulated the clauses of the Bill which imposed the contribution. To ask us to redefine companies which are to be regarded as forming a group for the purpose of exemption would be unreasonable and impracticable. For those reasons, I am sorry to say I feel we cannot now re-open the definition we agreed on then, in Committee and subsequently on Report, and


therefore I regret that I must advise the Committee to reject the new Clause.

Question put, and negatived.

Lieut.-Commander Braithwaite: May I ask for your guidance, Sir Charles? Without reflecting on the Chair's power to select admendments, I would respectfully call your attention to the fact that, of five Clauses dealing with post-war credits none has been called. Is there no method by which we can have an opportunity of discussing this question?

The Deputy-Chairman: No, I do not think there is.

Lieut.-Commander Braithwaite: We thought our post-war credits were out of order a long time ago.

New Clause.—(RESTRICTION OF BALANCING CHARGES.)

(1) Where under the provisions of Part I of the Income Tax Act, 1945, a balancing charge is made on any person the amount of additional tax which that person may be required to pay by reason thereof shall not exceed the total sum of the additional amounts of tax for which that person would have been liable if the excess part of the annual allowances which the balancing charge represents had in each relevant year of assessment not been allowed.
(2) For the purposes of this section a balancing-charge shall be deemed to represent an excess of allowance rateably spread over all years in which an annual allowance was made for the writing-off of the asset in respect of which the balancing-charge is imposed.—[Mr. Bell.]

Brought up, and read the First time.

Mr. Bell: I beg to move, "That the Clause be read a Second time."
This is directed to a small, narrow point of law which, I think, does a considerable injustice to a small category of taxpayers. The balancing charge to which the new Clause refers are balancing charges made on a taxpayer when he has written down the assets of an industry by what turned out to be, when the assets were sold, an excessive amount. It is a method by which, as the Committee will be aware, the Treasury seeks to recoup itself. In the case of a limited company which is liable only to Income Tax and not to Sur-tax, the method by which the balancing charge is computed again causes injustice to the company which is the taxpayer; but

where the taxpayer is either a private individual or a partnership, the method of computation imposes on him an injustice which this Clause seeks to remedy.
Depreciation allowances are calculated over a number of years—it may be a considerable number of years—and when the balancing charge is made by the Treasury, it is added to the assessment for the current year. In that way, although relief would be obtained year by year, by depreciation allowances as a relief against Income Tax the excess of allowance is aggregated, and the charge on him is a balancing charge in one single year. The assessment is made up not only of the Income Tax which he has saved by the depreciation allowances, but also charged on Sur-tax, which does not represent anything he ever paid to the Treasury. I think the Solicitor-General will agree that he has no answer on the merits of this Clause. It is a recognised anomaly in the incidence of Income Tax law. The only defence of which I know that could be made of what is a way of levying a fine on the taxpayer by making him pay a sum he is not due to pay is that it would make a lot more work for the Treasury if they had to recoup the balancing charge in the way suggested by the Clause.
2.0 a.m.
The suggestion is simply that a taxpayer should be entitled to appeal against the assessment on the ground that he is being made to pay through the tax more than he has saved by his depreciation allowances. It may seem to be a small matter to some hon. Members. I would, however, remind them that it is not the limited company which is affected, but the small ordinary trader or the small business partnership, who have levied upon them a balancing charge. I know of a case in which a man who was in a modest way of business had a bill for £500 sent to him which he could not reasonably have anticipated unless he had been a chartered accountant and knew of this peculiar anomaly in the law of England.
I hope that the right hon. and learned Gentleman, when he replies, will say that he will try to meet this point, and will not simply say it is going to cause too much work for the Income Tax authorities. I appreciate the force of that argument. This proposal means that they would


have to look back over the assessments of a number of years. But I should like to remind the Solicitor-General that the computation of this balancing charge involves looking back over years of assessments.
Actually, under Section 17 of the Income Tax Act of 1945, which imposes this charge, it is laid down, in sub-section (4) that certain amounts may not be exceeded by the balancing charge. For instance, it may not exceed the amount of any additional deductions allowed to the taxpayer under Section 18 of the Finance Act, 1932; it may not exceed the amount of any relevant exceptional depreciation allowance, and so on. There are many listed. Therefore, a taxpayer may always appeal against his assessment for balancing charge upon the ground that it exceeds those total sums. If he does so, the Income Tax authorities have to look back through their records for all the relevant years to see whether in fact the charge has been computed accurately. That being so, I think it greatly weakens the argument that the Committee ought not to accept this new Clause because it would entail additional work for the tax authorities.
The Solicitor-General may also say that an Amendment roughly on these lines was moved in Committee on the Finance Bill in 1945, and was not accepted by a Conservative Chancellor of the Exchequer, Sir John Anderson. I have read the report of that Debate with some care, and it appears to me that during the Debate the minds of all concerned were rather dominated by the fact that in 1945 we were at the end of a period of war, with very high taxation, and it was confidently expected that taxation would come down year by year, and that therefore the taxpayer might benefit by having these assessments made on him all in one year. But Sir John Anderson did not know then that in a few months an unfortunate change of Government would destroy that confidently anticipated prospect of steadily declining taxation. Therefore, the expected advantage to the taxpayer of having his balancing charge assessed in one year has not been realised so that one of the reasons which prompted Sir John Anderson to refuse the Amendment five years ago does not apply now.
I hope that the Solicitor-General will accept this new Clause, because it may

be that his refusal to do so will imply that he expects that another change of Government is about to take place, and that a period of declining taxation is about to set in. I hope he will accept the new Clause, because it really is not a desirable thing that an admitted and clear injustice should be accepted as a permanent feature of our taxation simply because to correct it would mean some strain upon the staff of the Inland Revenue.
I would emphasise to the Solicitor-General that there is no other method of taxation which is calculated in this peculiar way so as to impose what is really an undeserved charge on the taxpayer. These balancing charges, introduced in 1945, are themselves a refinement of tax extraction. I know that it may well be said that there is a balance to set off, but as all prudent firms write down assets as much as possible, the balancing charges must outweigh the balancing allowances. This is a refined way of extracting the last penny from the taxpayer, and if that is to be embarked upon, should not a little trouble—

Air-Commodore Harvey: On a point of order. May we have your permission, Sir Charles, to stop hon. Members opposite from giggling and making strange noises while my hon. Friend is speaking?

The Deputy-Chairman: There is a great deal of noise; I found difficulty myself in hearing what was being said.

Mr. Bell: At least, Sir Charles, I am sure that the Solicitor-General has been listening with his usual courtesy, and I know that, as always, he will give the greatest attention to the points which are being made. I apologise for taking up the time of the Committee—[Interruption]—hon. Members opposite do nothing to help—but this new Clause, which I hope I am moving as briefly as may be, is upon a matter which is of importance, not perhaps to hon. Members opposite, but to a great many ordinary law-abiding citizens who are willing to pay tax but who feel resentment when they get a large bill which represents nothing more nor less than a "kink" in the Income Tax legislation.
It is no joke for a £500 bill for tax to fall on a small business man


because of these allowances which are lumped in the one year's demand, so that he is pushed over the £2,000 level and is expected to pay this large, unexpected sum. I mentioned earlier the man who had sold his business and retired but did not think of this charge which would come along one year later. I know that the Solictor-General will agree that this is something which we ought to cure if we can, and I hope he will say that we are not going to rely on procedural difficulties to prevent action, but that we will really remedy this injustice if it can be done.

The Solicitor-General: We have listened to a very careful and full argument on a complicated problem, but I must tell the Committee that I feel that the situation is very much as it was when an almost identical proposal was made in May, 1945, by the hon. and learned Member for Hove (Mr. Marlowe) to the then Chancellor, Sir John Anderson. Sir John, in reply, said that if the proposal were accepted, this would involve an almost intolerable complication; there would be an impossible position if one had to write back the accounts of small businesses and traders for many years, as the proposal involved. It would be an almost intolerable complication to administer.
Although it may be to the disadvantage of a taxpayer to have the whole charge attributed to a single year, it may be to his advantage to have a large balancing allowance attributed to one year. The way the hon. and learned Member for Hove tried to get over the difficulty was to give the taxpayer an option. If the taxpayer has an option to spread back balancing charges and balancing allowances, then one must equally give the Revenue an option to spread back balancing charges and allowances when it suits them, because it is not fair to give an option to only one side and not to the other. The result would be really that the whole thing would become intolerably complicated.
In regard to the whole proposal, I cannot recommend the Committee to accept this Clause, but this is the kind of problem which the Tucker Committee, which is investigating Income Tax, would naturally take into account. I should have thought that, even if it were

at first sight practical to accept this proposal, it would be premature to do so before the recommendations, if any, on this point by the Tucker Committee are known, and for this reason I hope the Committee will agree that this Clause ought not to be accepted.

Mr. Bell: Before the Solicitor-General sits down, may I ask him whether it is not a fact that the earlier Amendment to which he referred was one for writing back for six years, at taxpayer's option, the balancing charge for a taxpayer, including limited companies? Is it not a fact that the proposal which I make need only apply to private persons and partnerships, and would therefore apply to a small category of taxpayers and would remedy this grievance with a minimum of inconvenience.

The Solicitor-General: Sir John Anderson described the process of writing back the balancing charges as appallingly complicated. It would be still more complicated to write back balancing allowances which this proposal would have to include if it were to be regarded as in any way complete.

Question put, and negatived.

New Clause.—(CHARGES FOR PREPARING TAX RETURNS.)

Reasonable professional fees in respect of the preparation of income tax returns shall be an allowable charge in the calculation of taxable income.—[Mr. N. Macpherson.]

Brought up, and read the First time.

Mr. Niall Macpherson: I beg to move, "That the Clause be read a Second time."
If it is a virtue, this Clause does not involve an intolerable complication. The meaning is plain upon the face of it and those hon. Members who have their Order Papers in their hands will understand it right away.
The principle upon which the Clause is based is simply that of equality of treatment of the subject. The present position is that traders are allowed to deduct in the calculations of their taxable income professional fees that are charged in respect of the preparation of income tax. The reason they are allowed to do that is, quite frankly, a matter of convenience to the Treasury, the reason being that it is not possible to discriminate


between charges that are made for the auditing of accounts and charges that are made in respect of the preparation of Income Tax returns. In a recent case, which was Smith's Potato Crisps Ltd. versus the Commissioners of Inland Revenue, Lord Porter, in what might be described as one of his obiter dicta, made it quite clear that the principle was violated by this practice. But the principle has now turned round the other way because the effect of the practice that has arisen is that another principle is now violated—that people are now treated in different ways, and dependent on whether they are or are not traders.
2.15 a.m.
I submit that an entirely false principle is now being followed and that the only true principle is to allow everybody to be treated in the same way. There were additional advantages in establishing that principle in this case. There was a time when it was possible for the inspectors of taxes to give considerable assistance to those making returns and to give them guidance in the preparation of their Income Tax returns, to make quite certain that they gained the benefit of all the allowances to which they were entitled. In fact, that is no longer now happening, or it is happening to a decreasing extent. The result is (hat when cases are taken by the taxpayers to accountants, the accountants almost invariably find a great many allowances to which the taxpayer is entitled are not being claimed.
It is obviously to the advantage of the Inland Revenue authorities themselves that the tax returns should be presented in the proper form. Therefore, it is to their advantage that where possible and where desirable expert assistance should be made available in the preparation of returns. If the expert assistance is so made available it will obviously save the taxpayer a great deal of money in the long run, simply by reason of the fact that it will save tax inspectors and their staffs a great deal of time. So, in this case, principle and expediency do combine together and I would commend the Clause to the Solicitor-General.

The Solicitor-General: This, again, is a Clause which I cannot recommend the Committee to accept. The argument upon which it was advanced was this: that trading companies are treated upon a

different footing from private persons in relation to expenditure incurred in preparing tax returns. The hon. Member for Dumfries (Mr. N. Macpherson) referred to Lord Porter's speech in the case of Smith's Potato Crisps. I rather think that he misunderstood what Lord Porter said. What he said was that an ordinary trading concern in the conduct of its undertaking necessarily must incur expenditure in preparing its trading accounts and that the fee payable to accountants to prepare those accounts was one which normally also included the preparation of their Income Tax returns.
In practice, it is impossible and impracticable to distinguish that portion of the fee referable to the preparation of the trading accounts—which is allowable—and the portion referable to the preparation of the Income Tax returns which strictly—says Lord Porter—is not allowable. A proposal to depart from this fundamental principle of our Income Tax law is really based on a misunderstanding of what Lord Porter said.
A trading concern is, in practice, allowed to deduct the expenses of preparing Income Tax returns for the very special reason I gave and that does not obviously apply in the case of private persons. Here, again, is a problem which might well form the subject of recommendations by the Tucker Committee. The question has been raised in previous Finance Acts as to whether the cost of a successful appeal in an Income Tax, Surtax or Excess Profits Tax matter should be allowed as taxable expenditure in the computation of profits. Indeed, that was the problem which the House of Lords were investigating in the Smith's Potato Crisps case. It is possible that the Tucker Committee might make recommendations with regard to this expense. If they recommended that the expenses of successful appeals should be deductable expenses, then it may well be—I do not want to commit myself one way or the other—that the expenses in preparing an Income Tax return or a Profits Tax return would be an expense which stood upon the same footing.

This Clause is based on what I submit is a misconception of the reasoning in Lord Porter's speech. It would depart from what is a clear principle in our Income Tax law, that one treats as deductions


expenses which are really expenses incidental to the carrying on of the trading concern. In present circumstances—and by that phrase I refer to the fact that the whole matter may well form a subject of investigation by the Tucker Committee—I feel that the proposal in the Clause is one which I cannot ask the Committee to accept.

Mr. Bracken: I think the right hon. and learned Gentleman would do great service to my hon. Friend, and indeed to the Committee, if he would call the attention of the Tucker Committee to his speech as it will be reported in HANSARD. A recommendation of that kind, even a qualified one, from the right hon. and learned Gentleman to that eminent lawyer and his colleagues might enable my hon. Friend to accept the right hon. and learned Gentleman's explanation. Will he see that a copy of HANSARD, with the speech suitably marked, is sent to the Tucker Committee?

Mr. Hugh Fraser: I do not think that the Committee is very much impressed by this constant reference by the Treasury Bench to various committees. When a problem arises which they are incapable of resolving they refer to this or that committee. It seems to me that the case presented here by my hon. Friend is an eminently reasonable one. It is most difficult for an ordinary person to deal with Income Tax and all the other taxes which fall upon him. These matters are so immensely complicated that what is urgently needed is a simplification and codification of the whole system. That is what the Government should seriously consider, instead of constantly referring to these various committees while being unable to make up their minds on the simplest problems.

Mr. Boyd-Carpenter: I think we should hear a little more from the Solicitor-General on this point. He referred continually to the Tucker Committee, but have we any reason to believe that the Tucker Committee will go into this particular question at all? My right hon. Friend put a very reasonable suggestion to the Solicitor-General, which would have made it quite certain that the Tucker Committee would have this matter

before it. The right hon. and learned Gentleman did not even rise. I am glad to see that he is about to rise now.

The Solicitor-General: My failure to rise was not due to any wish to be discourteous. This question of whether the expenses of successful appeals should be allowed is one which is very much discussed, and I have no doubt that the Tucker Committee have it in mind. I shall certainly take steps to call the attention of the Tucker Committee to the point raised by this Clause.

Mr. Boyd-Carpenter: May we have that clear? The Solicitor-General referred to the important question of the cost of successful appeals. That, however, is totally different from what is in this Clause. Do I understand the Solicitor-General's assurance to be that the subject matter of this Clause—the preparation of Income Tax returns—will be specifically drawn to the attention of the Tucker Committee?

The Solicitor-General: Yes, Sir.

Mr. Nabarro: There are a couple of points in the Solicitor-General's reply which, I think, merit the attention of the Committee. First, audit fees and accountancy fees are charges which a company is permitted as a charge for the purpose of Income Tax, Profits Tax, E.P.T., and N.D.C., whereas a private person is not so permitted. That seems quite intolerable.
The second point that merits attention is the fact that during the last 15 or 20 years the increase in the complexities of direct and indirect taxation have been such that it now defies the ability of the ordinary private citizen to understand taxation law. For instance, it will no doubt be of interest to the Committee to recall that between 1934 and 1937 a very extensive professional committee, under Lord Macmillan, sat for 3½ years on the codification and simplification of taxation.

Mr. Douglas Houghton: It was nine years, and the committee presented a report on which nothing was done.

Mr. Nabarro: My point has been stolen. I grant that they sat in all for nine years, but the operative period was between 1934 and 1937. The remainder


of the period was before 1934 and was purely of a preparatory character, which reiterates my point that the complexities of direct and indirect taxation are such that it defies the ability of the ordinary citizen to compute his tax liability without professional assistance. I believe that it is in the public interest that chartered accountants or incorporated accountants should be in a position to advise on each and every occasion where guidance is wanted, and that the fees involved should be admitted as charges against tax payable.

Mr. G. P. Stevens: Since I understand that the Solicitor-General is to draw the attention of the Tucker Committee to the report of this Debate, I think it should go on record that it is not altogether true to say that professional charges of this nature cannot be separately shown. It is the normal professional practice to render three separate bills; one for audit charges, one for accountancy charges, and the third for taxation charges.

Sir John Mellor: I should have thought that this was a question which the House of Commons could have decided for itself without the assistance of anyone. It is a matter of common knowledge that it is essential for anyone whose affairs are complicated to seek professional assistance. The Government has accepted the principle under the Town and Country Planning Act in the preparation of claims on the £300 million fund. There, professional assistance is allowed for, and a contribution can be obtained in the preparation of claims on forms S.1 and, now, L.39. Having accepted that, why should the Government jib now? The only reason is not merely because it is income tax but because it is a larger matter. Under the Town and Country Planning Act, the cost of making a contribution to professional fees will be relatively small. In Income Tax it will be larger.
2.30 a.m.
The Solicitor-General dealt with this as a matter of principle. If so, the same principle should apply to both. I should like to know how he is to distinguish between the contribution of professional fees incurred on the £300 million fund, and professional expenses for advice on Income Tax matters. Unless he can distinguish between those two I do not

think any argument of principle put forward holds water. This is a matter we are quite competent to decide for ourselves, without the assistance of any committee, however eminent. [HON. MEMBERS: "Divide."] I should like an answer. It is a straight-forward point, and I think the Solicitor-General should answer it.

Mr. Macpherson: In view of the attitude the Solicitor-General has taken, and in recognition of the fact that he has undertaken to lay this before the Tucker Committee, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(FURTHER PROVISIONS AS TO PROFITS TAX.)

(1) The following shall be added to subsection (2) of section thirty-one of the Finance Act. 1947:—
Provided that where in the case of an investment company this subsection would apply for any chargeable accounting period but for the fact that estate or trading income belonging to the body corporate has not been so apportioned, then in computing the income of the body corporate for the purposes of profits tax for that period income other than estate or trading income shall be left out of account.
In this proviso the expression 'estate or trading income' bears the same meaning as in subsection (8) of section fourteen of the Finance Act. 1939.

(2) Section thirty-one of the Finance Act. 1947, shall be deemed always to have had effect as amended by the foregoing proviso.—[Lieut.-Commander Braithwaite.]

Brought up, and read the First time.

Lieut.-Commander Braithwaite: I beg to move, "That the Clause be read a Second time."
I move this Motion in the absence of the hon. and learned Member for Leicester. North-East (Mr. Donovan), who has. I understand, adequate if not excellent reasons for not being able to be with us at the moment. The Clause is worthy of some discussion, if only for the reason that it is the first new Clause we have reached in the name of any hon. Member opposite, and none of them being willing to move it, the duty devolves upon us on this side of the Committee.
All of us respect the great knowledge possessed by the hon. and learned Gentleman in whose name this Clause stands. He enjoys a nation-wide reputation on


this subject. I have read the new Clause. I cannot say that I understand it in all its aspects. It is difficult for any of us to understand anything in these small hours, but were it high noon I should still have difficulty in understanding the language in which it is drafted. I lean with comfort on the experience and knowledge of the hon. and learned Gentleman who put it down. It may be that it was put down with the knowledge, and possibly the connivance, of the Law Officers. These things have happened.

The Solicitor-General: indicated dissent.

Lieut.-Commander Braithwaite: I should have thought the Solicitor-General would have been anxious to improve the Bill. It certainly stands in need of it. For many hours we have been endeavouring to shape it, but if this indeed reveals another split in the party opposite it is high time the country was informed.

Mr. Sydney Silverman: On a point of order. Would it be in order if the hon. and gallant Gentleman explained to the Committee what Clause he is moving?

Lieut.-Commander Braithwaite: That is quite unnecessary. The hon. Gentleman generally follows our proceedings with assiduity, and surely he heard you call the name of the hon. and learned Member for Leicester, North-East.

Mr. Silverman: He is not here.

Lieut.-Commander Braithwaite: Surely the hon. Member is aware that any Member of the Committee can move any new Clause. If he had followed my speech, he would know that I said I was moving this new Clause which stands in the name of the hon. and learned Member for Leicester. North-East. If there is this extent of error and gloom below the Gangway, I am performing a greater service than I thought. I think there must be some professional jealousy in the matter. There is a cleavage of opinion in the ranks of the legal profession on the benches opposite. We suspect there is a split in the party on the Clause itself. There is the absence of the hon. and learned Member who put it down. There is only one escape from the dilemma for the Government, and that is for the Law Officer to explain the

Clause to us, and, secondly, tell us the Government's attitude thereto and whether they are able to accept it or not.

Mr. Nally: This is quite an extraordinary thing. We have just had the hon. and gallant Gentleman the Member for Bristol, North-West (Lieut.-Commander Braithwaite) moving, as he is perfectly entitled to do, the new Clause which stands in the name of my hon. and learned Friend the Member for Leicester, North-East (Mr. Donovan). He began by saying, in effect, that he had not the slightest idea what it meant.

Lieut.-Commander Braithwaite: I am sure the last thing which the hon. Member for Bilston (Mr. Nally) would wish to do would be to misrepresent me and the careful arguments which I addressed to the Committee. What I said—and this is on record and can be read in the OFFICIAL REPORT, which I think will appear on Saturday morning, was that I found the drafting a little obscure. The intention of the new Clause is obvious, and if there are any hon. Members who do not understand it, there is a marginal note for them to study. I hope the hon. Member is not going to put into my mouth words which I never said.

Mr. Nally: The impression I got from the hon. and gallant Member was that he was much more modest in what he said when he was moving the new Clause than he was in his interjection. I gathered quite clearly that the hon. and gallant Gentleman did not know what it was about, but he felt it his duty to move it and find out. To do that he moved a Clause which he did not understand and with which he had not the remotest connection. He went on to pay a deserved tribute to the high ability and outstanding gifts of my hon. and learned Friend the Member for Leicester, North-East, who has rightly decided, for reasons which are perfectly obvious to me at any rate, if not to the hon. and gallant Member, that the circumstances were such that it was not necessary to move the Clause he had put down.
I should have thought that if hon. Members opposite had such a touching and justifiable faith in my hon. and learned Friend, they would have known perfectly well that my hon. and learned Friend, unlike the party opposite, does


not move a particular thing when he is satisfied that it is not necessary. Therefore, all I would say is that it seems to me that this is another typical example, particularly at this time of the morning, of what I might best describe as Tory Party high jinks and an attempt to keep us here as long as possible.

Lieut.-Commander Braithwaite: I think the Committee is in danger of coming to a conclusion. Do I understand that the hon. Member for Bilston (Mr. Nally) was accepting the new Clause on behalf of the Government? If so, my hon. Friends and I would like to congratulate him on his promotion to Ministerial office. I rather gathered he was accepting it.

The Solicitor-General: We have listened to a full and convincing argument in support of this new Clause. I should like to deploy shortly the reasons why we cannot accept it. Profits Tax is not charged on individuals or partnerships of individuals, and when there is a one-man company the whole of whose income is attributed to its member for Surtax purposes, it is treated as an individual or partnership and Profits Tax does not have to be paid by that company.

FIFTH SCHEDULE.—(ENACTMENTS REPEALED.)

Amendment made: in page 42, line 2, at end, insert:

PART I REPEALS HAVING EFFECT FROM BEGINNING OF 1951

Reference.
Short Title.
Extent of Repeal


2 & 3 Geo. 6, c. 41
The Finance Act, 1939.
Section ten.


3 & 4 Geo. 6, c. 29
The Finance Act, 1940.
Section nine.


5 & 6 Geo. 6, c. 21
The Finance Act, 1942.
Section eight.


6 & 7 Geo. 6, c. 28
The Finance Act, 1943.
Section eight.


9 & 10 Geo. 6, c. 13
The Finance (No. 2) Act, 1945.
Section seven.


10 & 11 Geo. 6, c. 35.
The Finance Act, 1947.
Subsections (2) to (4) of section eight.


12, 13 & 14 Geo. 6, c. 89.
The Vehicles (Excise) Act, 1949.
Paragraph (e) of subsection (2) of section four; subsection (4) of section thirty; paragraph 5 of the Third Schedule; paragraph 1 of the Sixth Schedule.

Sometimes, however, we get the case of an investment company in which not the whole but part of the income is attributed to members. This Clause seeks to say that in these cases the same principle should apply. We felt, when framing the Profits Tax legislation, that the case of a company the whole of whose income is attributed to individuals is in a special category. We feel it would not be reasonable and proper to extend the principle to companies which are not really analogous to trading partnerships.

Lieut.-Commander Braithwaite: The Solicitor-General has explained the matter. I express the hope that the hon. and learned Member for Leicester, North-East, will not now be disciplined for putting down a Clause so objectionable to the Government. I think it is a good Clause, but I shall not take up the time of the Committee by pressing it to a Division, and I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

Schedules 1 and 2 agreed to.

Schedule 3 disagreed to.

Schedule 4 agreed to.

PART II MISCELLANEOUS REPEALS

In page 42, line 51, column 3, at end, insert:
in Group 35 in Part I of the Eighth Schedule, sub-paragraphs (i) to (iii) of paragraph (a), except the word 'First' where last occurring.

In page 43, line 7, leave out from beginning to end of Schedule.—[The Solicitor-General.]

Schedule, as amended, agreed to.

New Schedule.—(SECTION 4 (2) OF THE VEHICLES (EXCISE) ACT, 1949, AS AMENDED.)

[Note.—In this Schedule words inserted by the proposed new Clause (Excise licences for tractors, etc.) are printed in heavy type.]

(2) This section applies to the following mechanically propelled vehicles, that is to say—
(a) locomotive ploughing engines, tractors, agricultural tractors and other agricultural engines, which are not used on public roads for hauling any objects, except as follows, that is to say—

(i) for hauling their owe necessary gear, threshing appliances, farming implements, a living van for the accommodation of persons employed in connection with the vehicle, or supplies of water or fuel required for the purposes of the vehicle or for agricultural purposes;
(ii) for hauling from one part of a farm to another part of that farm, agricultural produce of, or articles required for, the farm;
(iii) for hauling, within fifteen miles of a farm in the occupation of the person in whose name the vehicle is registered under this Act, agricultural produce of that farm or fuel required for any purpose on that farm or for domestic purposes by persons employed on that farm by the occupier of the farm;
(iv) for hauling articles required for a farm by the person in whose name the vehicle is registered under this Act, being either the owner or occupier of the farm or a contractor engaged to do agricultural work on the farm by the owner or occupier of the farm;

(b) vehicles designed, constructed and used for the purpose of trench digging or any kind of excavating or shovelling work, which—

(i) are used on public roads only for that purpose or for the purpose of proceeding to and from the place where they are to be used for that purpose; and
(ii) when so proceeding, neither carry nor haul any load other than such as is necessary for their propulsion or equipment;

(c) vehicles designed and constructed as mobile cranes which—

(i) are used on public roads only either as cranes in connection with work being

carried on on a site in the immediate vicinity or for the purpose of proceeding to and from a place where they are to be used as cranes; and
(ii) when so proceeding neither carry nor haul any load other than such as is necessary for their propulsion or equipment;

(d) mowing machines;
(f) vehicles (other than vehicles mentioned in paragraphs (a) to (d) of this subsection) which are constructed and used on public roads for haulage solely and not for the purpose of carrying or having superimposed upon them any load except such as is necessary for their propulsion or equipment.—[Mr. Gaitskell.]

Brought up, read the First and Second time, and added to the Bill.

New Schedule.—(DOUBLE TAXATION RELIEF.)

PART I PROVISIONS FOR CREDIT BY WAY OF UNILATERAL RELIEF

1. Credit for tax paid under the law of the territory outside the United Kingdom in respect of income arising in that territory shall be allowed against any United Kingdom income tax or profits tax chargeable in respect of that income:
Provided that—

(a) where the territory is the Isle of Man or any of the Channel Islands, the limitation to income arising in the territory shall not apply;
(b) where arrangements with the Government of the territory are for the time being in force by virtue of Part V of the Finance (No. 2) Act, 1945, credit for tax paid under the law of the territory shall not be allowable under this paragraph in the case of any income if any credit for that tax is allowable under those arrangements in the case of that income.

2. Profits from or remuneration for personal or professional services performed in the territory shall be deemed to be income arising in the territory for the purpose of the preceding paragraph.
3. Where a dividend paid by a company resident in the territory is paid to a company resident in the United Kingdom which controls, directly or indirectly, not less than one half of the voting power in the company paying the dividend, tax paid under the law of the territory by the first mentioned company in respect of its profits shall be taken into account in considering whether any, and if so what, credit is to be allowed in respect of the dividend.
4. The following provisions shall, without prejudice to the generality of the last preceding paragraph, have effect where the territory is within the Commonwealth territories—

(a) where the income arising in the territory is an ordinary dividend paid by a company which is resident in the territory, tax paid under the law of the territory by the company in respect of its profits shall


be taken into account in considering whether any, and if so what, credit is to be allowed in respect of the dividend; and
(b) where the income arising in the territory is a dividend paid by a company resident in the territory on participating preference shares and represents both a dividend at the fixed rate to which the shares are entitled and an additional participation in profits, sub-paragraph (a) of this paragraph shall apply in relation to so much of the dividend as represents the said additional participation in profits as if that part of the dividend were an ordinary dividend.

PART II AMENDMENTS OF NINTH SCHEDULE TO THE FINANCE ACT, 1947, APPLICABLE TO UNILATERAL RELIEF

1. Notwithstanding anything in paragraph 3 of Part 1 of the Ninth Schedule to the Finance Act, 1947 (which provides that relief by way of credit shall be given only where the person in question is resident in the United Kingdom),—
(a) credit by way of unilateral relief for tax paid under the law of the Isle of Man or any of the Channel Islands may be allowed if the person in question is, for the chargeable accounting period or year of assessment in question, resident either in the United Kingdom or in the Isle of Man or the Channel Islands, as the case may be;
(b) credit by way of unilateral relief for tax paid under the law of any territory in respect of income from an office or employment of profit the duties whereof are performed wholly or mainly in that territory may be allowed against income tax chargeable under Schedule E in respect of that income if the person in question is, for the year of assessment in question, resident either in the United Kingdom or that territory.

2. In sub-paragraph (3) of paragraph 7 of the said Part I (which provides that tax which can be allowed as a credit neither against income tax nor against the profits tax shall be allowed as a deduction in computing the amount of the income chargeable to the profits tax), after the words "the amount of the income," where they last occur, there shall, in relation to credit by way of unilateral relief, be deemed to be inserted the words "of the trade or business in question for the chargeable accounting period next following the period on the income of which the foreign tax was paid."

PART III TRANSITIONAL PROVISIONS

1. Where tax is paid under the law of a territory outside the United Kingdom in respect of income which, for profits tax purposes, is or forms part of the profits for a chargeable accounting period ending at or before the end of March, nineteen hundred and fifty—
(a) credit for the tax so paid shall not be allowed by way of unilateral relief against the profits tax; and
(b) the tax so paid may be deducted in computing the amount of the profits for profits tax purposes notwithstanding that

credit (being credit by way of unilateral relief) falls to be allowed therefor against income tax; and
(c) where the income is, for income tax purposes, income of the year 1950–51, subparagraph (3) of paragraph 7 of Part I of the Ninth Schedule to the Finance Act, 1947, as modified by paragraph 2 of Part II of this Schedule, shall apply or not apply in relation to so much of the tax so paid as cannot be allowed as a credit against income tax according as the next chargeable accounting period of the trade or business in question does or does not end after the said end of March:
Provided that where the said next chargeable accounting period falls partly before and partly after the said end of March, the tax which would, but for this proviso, go to reduce the amount of the profits for the said next chargeable accounting period shall be apportioned between the two parts of the said next chargeable accounting period, and so much only of that tax as is apportioned to the second part of the period shall go to reduce the profits for that period.

2. Where tax is paid under the law of a territory outside the United Kingdom in respect of income which, for profits tax purposes, is or forms part of the profits for a chargeable accounting period falling partly before and partly after the said end of March, the tax so paid shall be apportioned between the two parts of the period, and sub-paragraphs (a) and (b) of paragraph 1 of this Part of this Schedule shall apply in relation to the tax apportioned to the first part of the period as they apply in relation to income which, for profits tax purposes, is or forms part of the profits for a chargeable accounting period ending at or before the said end of March.

3. Profits tax for any chargeable accounting period ending at or before the said end of March shall be left out of account in ascertaining under the proviso to subsection (2) of the section (Unilateral relief for double taxation) of this Act, the total amount of the credit by way of unilateral relief which may be allowed in respect of any tax.

4. Profits tax for any chargeable accounting period falling partly before and partly after the said end of March shall be apportioned between the two parts of the period and—
(a) the credit by way of unilateral relief to be applied in reducing the amount of the profits tax for that period shall not exceed so much of the profits tax as is apportioned to the second part of the period; and
(b) paragraph 3 of this Part of this Schedule shall apply in relation to so much of the profits tax as is apportioned to the first part of the period as it applies in relation to profits tax for a chargeable accounting period ending at or before the said end of March.

5. Any apportionment falling to be made under this Part of this Schedule of—
(a) tax which would, but for the proviso to paragraph 1 thereof, go to reduce profits for a chargeable accounting period falling partly before and partly after the said end of March; or


(b) tax paid under the law of a territory outside the United Kingdom in respect of income which, for profits tax purposes, is or forms part of the profits for any such chargeable accounting period; or
(c) profits tax for any such chargeable accounting period,
shall be made by reference to the number of months or fractions of a month in the two parts of the chargeable accounting period.—[The Solicitor-General.]

Brought up, and read the First time and Second time.

Mr. Selwyn Lloyd: I beg to move, as as Amendment to the proposed Schedule, in paragraph 1, to leave out "arising" and to insert "chargeable."
This would alter the beginning of Part I of the Schedule, and I submit that this is a reasonable change to make. I am told that there are certain cases in which income chargeable under the law of a foreign territory may not be income arising in that territory. As the purpose of this Schedule is to give relief in respect of double taxation, for which we are grateful to a certain extent, I urge on the Chancellor that he should make the relief as comprehensive as possible.
2.45 a.m.
I am told that an example where income may be chargeable although not arising, is the case of a company operating in one territory and having a branch in another territory and that it may be chargeable to tax in the case of income arising in both countries. Under the new Schedule this company could only get relief from tax in the country in which the income arises. I am told the other type of case is that of India, where under the law of India a United Kingdom company would be liable to pay Indian tax on its profits arising inside and outside India if more than one half arises inside India. Therefore, according to the Schedule with the term "arising" still in it, there would be no relief in respect of the Indian tax charged on the profits of that company which did not arise in India. This is not an easy matter to explain in detail, but it must be obvious that there is a difference between the two terms "arising" and "chargeable." I should have thought that the better test would be that "chargeable" would extend the relief as widely as possible.

The Solicitor-General: I am sorry, but we feel we are not in a position to accept

this Amendment. The proper framework for these bi-lateral agreements is that each country should grant relief to its own residents in respect of income of those residents arising in the foreign country or Commonwealth country as the case may be. It cannot be said to be consistent with proper taxation principles to admit the right of a foreign country to tax non-residents in respect of income not arising in that country. What the Amendment proposes is that the United Kingdom should grant relief to United Kingdom residents in respect of tax charged in a foreign country, not only upon income arising in that country, but also on income which that foreign country purports to charge, although it arises outside the confines of that country.
Unless one is going to have a great deal of untidiness and muddle in these reciprocal agreements when they are negotiated—and we are doing our best to negotiate them—we feel we ought to adhere to the same principle as where reciprocal agreements are entered into, the system of unilateral relief should only be applicable to income arising in the foreign countries, and should not extend to income charged in the foreign country. There is only one exception, and that is for special reasons, in the Isle of Man and the Channel Islands, but these special reasons cannot be said to be reasons for general application, and I hope, therefore, that the Committee will agree to reject the Amendment.

Colonel Crosthwaite-Eyre: Can the right hon. and learned Gentleman say whether, under the existing bilateral agreements, it is not a fact that the income subject to the reliefs we are discussing are the amounts chargeable and not arising, and that this new term is only in respect of the new Schedule?

Mr. Foster: I think the argument of the learned Solicitor-General is based only on tidiness. I ask the Committee to support this Amendment on the ground that it is illogical to give relief for foreign tax only in respect of tax arising in that foreign territory. The idea of unilateral relief is to regard foreign tax as a kind of expense. I am putting it crudely, and not in a technical way. From the layman's point of view, it says that where a trader is taxed abroad that should be accounted as expense. What logical reason is there


for not counting it as an expense if it is, let us say, Indian tax levied upon income in India, but not as an expense when it is Indian tax levied upon income going into India, say from Egypt.
There is no logical reason for the distinction. The Solicitor-General says it is for the sake of keeping it tidy, and that otherwise there would be too many complications. I promise him that there will not be. American legislation is beneficial to American traders and just says that foreign tax shall be an expense. That is all that need be said. I do ask the Solicitor-General to reconsider this.

The Solicitor-General: In answer to the first question, our present reciprocal double taxation relief arrangements relate only to income arising, not to income chargeable. I did use the word "tidy-ness." It was perhaps a bad word, but I meant that we thought it was consistent with taxation principle only to extend this relief to income arising. It is for that reason that we have worded the Schedule in the way it appears. We would only recognise the right of foreign countries to impose tax upon income

New Schedule.

(PURCHASE TAX: SUPPLEMENTARY PROVISIONS AS TO ROAD VEHICLE CHASSIS AND ROAD VEHICLES.)

PART I

5
PROVISIONS DEALING WITH TAX IN RESPECT OF ROAD VEHICLE CHASSIS.



1.—(1) Purchase tax in respect of a road vehicle chassis shall be chargeable on the wholesale value of the chassis complete but without additions, and for the purposes of section twenty-one of the Finance (No. 2) Act, 1940 (which relates to the determination of wholesale value), any chassis in respect of which tax is chargeable shall be assumed


10
to be in that state.



(2) The following shall be deemed to be additions to a chassis for the purposes of this paragraph, namely—



(a) a driver's cab;



(b) accumulators used for the purpose of the supply of power for propulsion;


15
(c) in the case of a chassis for a tractor or locomotive designed for use as a component of a composite vehicle, a turntable, coupling gear or equivalent mechanism.



(3) Subject to the last foregoing sub-paragraph, it shall be for the Commissioners to determine for any chassis or type of chassis what parts and accessories are, for the purposes of this paragraph, to be deemed to belong to a complete chassis or to be additions thereto,


20
and what type of any part or accessory deemed to belong to a complete chassis a chassis lacking that part or accessory is to be treated for those purposes as having.



(4) In exercising their powers under the last foregoing sub-paragraph, the Commissioners shall wherever practicable have regard to any standard commercial specification for the type of chassis in question.


25
2. The fitting to a road vehicle chassis of items deemed to be additions thereto for the purposes of the foregoing paragraph shall not be treated as the application of a chargeable process.



3.—(1) In relation to road vehicle chassis, the enactments relating to purchase tax shall have effect as if—


30
(a) any dealing with a goods vehicle (and in particular any purchase, appropriation or application, or importation thereof) were a dealing with the vehicle's chassis; and



(b) goods vehicles were chargeable goods for the purposes of any reference to a business of, or a business including, the selling, or the letting out on hire, of, chargeable goods;

arising in those countries, except in the case of their own residents. We are talking of tax on our residents. It is for that reason that we charge it in that way.

Mr. Foster: All the more reason if they are doing something which we do not recognise, to recognise this as expenses against our people. The fact is that traders want to have a tax they have paid abroad credited in the way proposed. Therefore, if Indians charge tax upon Egyptian income into India, really the least we can do is to say to the trader that he should get off that as well.

The Solicitor-General: We are not talking of tax as an expense; we are talking of relief or credit in respect of tax. Where we have tax chargeable by a foreign country on a United Kingdom resident in respect of income not arising in that foreign country it would be allowable. I gather it is the case that it is allowable as trading expense.

Amendment to the proposed Schedule negatived.

Schedule added to the Bill.

35
and the fact that a chassis forms part of a vehicle shall not affect the operation in relation to the chassis of references in the said enactments to goods resulting from the application of a process, if when the process is completed the vehicle is a goods vehicle.



(2) In this paragraph the expression "goods vehicle" means a mechanically propelled road vehicle constructed or adapted for use for the carriage or haulage of goods or burden


40
of any description not forming part of the vehicle or necessary for its propulsion or equipment, but does not include



(a) vehicles which are chargeable goods under Group 35 in Part I of the Eighth Schedule to the Finance Act, 1948;



(b) vehicles which are constructed or adapted mainly for the carriage of passengers


45
but are exempt from purchase tax under paragraph (c) of that Group;



(c) vehicles of the following descriptions which are designed and permanently fitted solely or mainly for a function other than the carriage of passengers or goods



(i) mobile cinemas, sound film production vehicles, television production vehicles and recording vans;


50
(ii) mobile canteens and shops, mobile clinics and travelling libraries;



(iii) mobile printing presses and other mobile workshops;



(iv) hearses (but not including hearsettes);



(v) gully emptiers, road cleansing, road watering and refuse collecting vehicles;



(vi) travelling lavatories and wash places;


55
(vii) breakdown vehicles fitted with a jib crane;



(viii) engineering plant;



(d) tractors and locomotives, except tractors or locomotives designed for use as components of a composite vehicle;



(e) industrial and works trucks designed primarily for use in factories, docks, yards


60
railway stations or warehouses;



(f) wheeled vehicles which drive through all road wheels and are of less than 30 cwt. unladen weight;



(g) pedestrian controlled vehicles;



(h) caravans.


65
(3) The Treasury shall have power by order to amend sub-paragraph (2) of this paragraph, and subsections (3) to (6) of section twenty-one of the Finance Act, 1948 (which provide for approval or annulment by the House of Commons and other matters in the case of orders under that section), shall apply to orders under this sub-paragraph as they apply to those orders.


70
4. Where the Commissioners are satisfied—



(a) that purchase tax has become chargeable in respect of a road vehicle chassis;



(b) that the chassis has been used for the construction of a vehicle which is neither a goods vehicle within the meaning of the last foregoing paragraph nor a vehicle falling within paragraph (a) or (d) of sub-paragraph (2) of that paragraph; and


75
(c) that the chassis has not previously been used for the construction of a vehicle;



the purchase tax chargeable in respect of the chassis shall be remitted or, if it has been paid, shall be repaid.

PART II

PROVISIONS ADJUSTING CONTRACTUAL RIGHTS IN RELATION TO PURCHASE TAX IN RESPECT OF ROAD VEHICLES


80




1.—(1) This Part of this Schedule applies to vehicles which—



(a) are not chargeable goods under Group 35 in Part 1 of the Eighth Schedule to the Finance Act, 1948; but



(b) would have been so if the Bill for this Act as originally presented to the House of Commons had been passed without amendment;


85




and in respect of which purchase tax would have been chargeable if that Bill had been so passed.



(2) In this Part of this Schedule the expression "relevant vehicle" means a vehicle to which this Part of this Schedule applies, the expression "budget day" means the eighteenth


90
day of April, nineteen hundred and fifty, and the expression "process of manufacture" has the same meaning as in section sixteen of the Finance Act, 1946.



2. Subject to paragraph 5 of this Part of this Schedule, where a relevant vehicle was sold in the course of a business under a purchase made after budget day and before the date of the passing of this Act at a price exceeding the price at which, in the ordinary course


95
of that business, similar vehicles were sold or offered for sale immediately before budget day, the buyer shall be entitled to deduct from the price, or (if he has paid the price) to recover from the seller as money received by him for the use of the buyer, an amount equal to the excess, except in so far as the seller proves that the excess was included in the price by reference to matters other than—


100
(a) his prospective liability by virtue of this Act to purchase tax in respect of the vehicle; or



(b) any increase attributable to the prospective liability as aforesaid of any other person in the price charged to the seller on a contract made by him after budget day for the purchase of the vehicle or for the application of a process of manufacture


105
resulting in the vehicle.

Brought up, and read the First time.

Motion made, and Question proposed, "That the Schedule be read a Second time."—[Sir S. Cripps.]

Mr. Hollis: When the new Clause relating to Purchase Tax was being discussed a day or two ago I thought we were agreed that it was very important to get a fair definition of what was meant by the word "chassis." I thought the Solicitor-General had no difference of opinion with the rest of us that the definition given was by no means clear at that time. It is true that the Debate was carried on at that time with a certain amount of light-heartedness, but I think that we all understood that there was seriousness behind it. Therefore, it is important that we should now see whether we have any clearer definition of this word in this Schedule. I cannot think that we have.
In subsection (2) where the matter is first tackled, we are told a certain number of things that a chassis is not. It is not, apparently, a cab, or an accumulator or a turn-table. If anything is not a cab, an accumulator or a turntable, it is for the Commissioners to make up their minds whether it is a chassis or not. One thinks of the old Victorian porter, who, considering what he should do with the livestock which had appeared on his railway, said, "Dogs is dogs, and rabbits is dogs, but a tortoise is an insect and therefore, travels free." One would not

think that an important commercial Clause was to be inserted into the laws of this land. Then we come to this:
… the Commissioners to determine for any chassis or type of chassis what parts and accessories are, for the purposes of this paragraph, to be deemed to belong to a complete chassis, or to be additions thereto, and what type of any part or accessory deemed to belong to a complete chassis a chassis lacking that part or accessory is to be treated for those purposes as having.
I think that the Chancellor really deserves the title of the "Shadwell" of the Treasury Bench for that one.
The poet Dryden, hon. Gentlemen may recall, wrote of one whom he considered the worst poet of his day, and said:
The rest to some faint meaning make pretence,
But Shadwell never deviates into sense.
Well, we go from strength to strength, and from precedent to precedent, and after line 47, we see some of the things on which this tax is not charged. These include hearses, but not hearsettes, and we shall, perhaps, hear from the Financial Secretary of that important distinction. Then it is a great comfort to be informed that we are not to pay Purchase Tax on travelling lavatories. I have never come across a motor travelling lavatory, but it will be realised that great opportunity may be offered for tax evasion. I should imagine that it will be difficult for the courts to decide whether a motor vehicle which contains a lavatory, exists for the purpose of containing a lavatory,


or for the carriage of passengers who may make use of it. For this, the Government will be remembered to all eternity.
Then, in line 70, we have a bland statement—I am omitting two other sections—which reads:
4. Where the Commissioners are satisfied—

(a) that purchase tax has become chargeable in respect of a road vehicle chassis;
(b) that the chassis has been used for the construction of a vehicle which is neither a goods vehicle within the meaning of the last foregoing paragraph nor a vehicle falling within paragraph (a) or (d) of subparagraph (2) of that paragraph; and
(c) that the chassis has not previously been used for the construction of a vehicle;

the purchase tax chargeable in respect of the chassis shall be remitted or, if it has been paid, shall be repaid.
It is possible that (b) and (c) make other qualifications upon that particular chassis, but in what sense the tax is chargeable—that is, if it is not chargeable—is something which I hope will be explained. There is one other point from Part II, and I must explain that I am no expert in these things. I am no lawyer, but it seems extraordinary to read:
1.—(1) This Part of this Schedule applies to vehicles which—

(a) are not chargeable goods under Group 35 in Part I of the Eighth Schedule to the Finance Act, 1948; but
(b) would have been so if the Bill for this Act as originally presented to the House of Commons had been passed without amendment;".

That is to say, we are referred to something which, by definition, no longer exists. I should, indeed, be grateful if our lawyer Members can tell me if there is any precedent for referring subjects of His Majesty to words which, by definition, no longer exist. If that old Schedule, though not in the Bill as such, is still a part of the Bill in the sense it is referred to, I do not know whether we must not consider that we have a right to discuss certain other Amendments.
3.0 a.m.
I do not want to take the Committee's time any longer. We did, on the new Clause, have some occasion to call attention to the fact that it was difficult to understand that chassisless vehicles were

chassis and all the rest, but I will not go into that argument. We asked, not for reasons of flippancy, if it was possible to express these matters clearly. That was a very important reason why they should not have been put into the law at all.
We eagerly study the Schedule to see if the right hon. and learned Gentleman made clearer some of the things which were left confused by the original Clause. It seems that the confusions of the Clause are as nothing compared with the confusions of the Schedule, and it would be impossible for any subject of His Majesty or for any judge to decide who is liable to this tax and who is not liable. I would welcome it if the Chancellor would agree to withdraw the Schedule and, on the Report stage, give us something that is at least intelligible and something remotely resembling the King's English.

Mr. H. Strauss: I wish to add to the very important point on Lines 84 and 85. I think the right hon. and learned Gentleman will realise the extremely important issues which are raised by putting lines such as these into an Act of Parliament. Let me remind the Committee how Clause 1 (1) of Part II runs:
This Part of this Schedule applies to vehicles which—

(a) are not chargeable goods under Group 35 in Part 1 of the Eighth Schedule to the Finance Act, 1948; but
(b) would have been so if the Bill for this Act as originally presented to the House of Commons had been passed without amendment;

and in respect of which purchase tax would have been chargeable if that Bill had been so passed.
The position is much worse than was indicated even by my hon. Friend the Member for Devizes (Mr. Hollis), who said that that would make it necessary to look back at a Schedule which has been abandoned or a Clause which has been abandoned. It would necessitate looking at the entire Finance Bill as it was originally introduced. Indeed, it would. Is it suggested that when this Act is printed by His Majesty's Stationery Office and when it is used in the courts, the whole of the Bill as originally introduced is going to be printed with it? If it is not, how is any practitioner to see what the position is? How are the courts to construe this?
My hon. Friend the Member for Devizes asked if there were any precedents for this. I think I am right in saying there are at least two precedents—on the last occasion we debated this matter I drew it to the attention of the House of Commons—for the phrase, "the Bill for this Act." That is rare enough, but it does appear, as far as I can remember, in at least two Statutes simply to define a date "as from the date when the Bill for this Act was introduced"; but I know of no precedent and I can think of none in an Act, where you are referred to what the law would have been if the extremely long Bill as originally presented to the House of Commons had been passed without amendment.
I believe it is the desire of hon. Members in all quarters of the Committee that an Act of Parliament passed by this House should be as comprehensible as possible. It is sometimes thought that the legal profession likes obscurity of this kind. It is not so. This sort of thing, I submit, is more offensive to the legal Members in the Committee than to anybody else, but I think every layman here will join in the protest against passing a Bill in so fantastic a form.
I wonder really if this Committee can view with indifference the comments that will be made by the judiciary if we pass legislation in this form. I have sympathy with the Solicitor-General because everybody knows how hard he is working and I do not know how far this matter had been brought to his attention before my hon. Friend the Member for Devizes and I raised it; but I ask him to say whether it is proposed to print in every copy of this Bill, when it becomes an Act, a copy of the Bill as originally introduced.
If it is not so proposed, it will be impossible to construe the Bill now before us when it becomes an Act of Parliament. If it is proposed to annex the whole of the Bill, as originally introduced, to this Bill as it will be when we have passed it and it becomes an Act, then the unnecessary labour which will be thrown upon every practitioner, upon the courts and indeed upon every citizen who tries to ascertain the position will be quite intolerable. I hope the Solicitor-General will say that it is quite impossible for the Government to recommend

that Parliament should accept this Schedule in this form.

Mr. Peter Thorneycroft: I think the whole Committee must be grateful to my hon. Friend the Member for Devizes (Mr. Hollis) and my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss) for the point they have put and the attention they have drawn to the drafting of this Schedule. The fact is that the more and the closer one looks at the Schedule, the more certain the whole Committee will be that it will have to be withdrawn.
May I say what I think is the fundamental difficulty in which the Government find themselves about the whole of this matter? They set out—we thought quite wrongly when we debated the principle—to impose a tax upon commercial vehicles. They then found that it would be quite impossible to impose a tax on the bodies of a great number of these vehicles. We could have told them that before, because a great many of them are in the form of chassis only; so they dropped that side of their proposal.
They decided, instead, to try to tax the chassis of a commercial vehicle. To their great horror they discovered that a great many had no chassis. The result is that all they have done, as will be seen from the Schedule, is to throw the whole burden of deciding what is to be taxed on to the Commissioners. I ask the right hon. and learned Gentleman to explain to us what are the limitations, if any, placed on the discretion of the Commissioners in paragraph 1 (3). It seems to me that, subject to the fact that they must not tax a driver's cab or accumulators, they can tax anything they like, up to the whole vehicle, provided they do not tax at more than 33⅓ per cent. It is a very curious way of legislating. One would have thought that this Committee would have had closer control of the amount of taxation to be imposed on the subjects of the Crown.
Secondly, they found that it would not be right to tax a whole range of vehicles which ordinarily would come within the mischief of this Clause, so they then proceeded to set out a whole list of vehicles which would be excluded. We propose in our later discussions to submit Amendments of additional vehicles which we think should also be excluded. But I


should like to ask the right hon. and learned Gentleman, or somebody else on behalf of the Government, to explain to us—I think it would shorten our later discussion—the principle upon which they are working.
Upon what principle are they excluding some commercial vehicles and including some others? It may be that there is a common theme which runs through travelling lavatories, pedestrian-controlled vehicles, and a hearse, but if there is some common principle of that kind I think the Committee ought to be told what it is in order that the public should know why some of their vehicles bear a rather savage rate of taxation while others are tax free.
My third point is this. It may be quite plain to others, but it is not plain to me: what is the position about the trailer? Certainly it is a goods vehicle constructed for use on the road and it is adapted for the carriage of goods and it will not move at all unless it is mechanically propelled. On the face of it one would have thought that it was included in the mischief of the Clause, but I have been assured that in the general view it is excluded. Would the right hon. and learned Gentleman tell us whether it is in or out? If trailers are not included within the mischief of the Clause, why is it necessary to exempt caravans? I think some explanation of matters of that kind are necessary before we part with the Schedule.
The fourth point to which I would draw the attention of the Solicitor-General is this. What is the position about passenger vehicles? If I could call attention to paragraph 3 (2), hon. Members will see that it reads:
In this paragraph the expression 'goods vehicle' means a mechanically propelled road vehicle constructed … for … the haulage of goods … but does not include …
—and if hon. Members look down the list they will see that it does not include some types of passenger vehicle. By implication, then, it does include other types of passenger vehicle.

Mr. Pannell: Such as what? Would the hon. Member particularise?

3.15 a.m.

Mr. Thorneycroft: I wish I could. It is quite impossible to find out. I am grateful for the hon. Member's intervention,

which exposes the nonsense of the Schedule.

Mr. Pannell: I can only say that I think the hon. Member is making very heavy weather of a matter which would be answered by anybody with knowledge in the trade.

Mr. Thorneycroft: It may be that the hon. Member, without the Order Paper, finds things a great deal easier than I do with one. I can assure him that many hours of patient research have been given to this by my hon. Friends and myself. It is extraordinary to start a paragraph by defining a goods vehicle, which, you would have thought, would be a vehicle which carries goods, and then to exclude from it vehicles which carry passengers. It may be that there is a good explanation.
In the original Bill referred to in the second part of the Schedule, certain forms of passenger vehicle were included—the smaller ones carrying under 12 persons. I do not know whether there has been any change in the Government's policy on that. Will they say if there has, and if so, how it fits into this wording? Among the excluded in 2 (b) you see:
vehicles which are constructed or adapted mainly for the carriage of passengers but are exempt from purchase tax. …
under paragraph (c) of Group 35, in Part I of the Eighth Schedule to the Finance Act, 1948. If you look at that you find hearses are not included. But not content with that, the Clause goes on to exclude them again. Why this morbid interest in the dead?
I think I and my hon. Friends have said enough to show that this bears the marks of a hurriedly drafted Schedule. It is a disgrace, a barbaric Schedule, and I think I would carry the whole Committee with me in saying that the best thing the Government could do would be to withdraw it altogether.

Sir W. Wakefield: When the Clause on Purchase Tax on chassis and road vehicles was discussed, we were told by the Government that it should be discussed in connection with this Schedule. The Solicitor-General said how difficult it was to explain what was meant by a chassisless vehicle, and the definitions that have been given on parts of this Schedule show how utterly wrong it is for this Committee


to pass these definitions in the way they are in the new Clause and in the Schedule.
The point I want to make is that in so far as the chassis-less vehicle is concerned there is no need to be in any difficulty about the definition. The chassis-less vehicle is an integral vehicle, and all that it is necessary to say is that in such a vehicle the following parts are defined for purposes of Purchase Tax—power unit, transmission unit, wheels, and so forth. If that is done there is no doubt whatever what part of the integral vehicle is due to pay Purchase Tax. That is a simple, straightforward way of doing it. It is wrong that the Commissioners should have to decide something which Parliament, if there is proper drafting, can decide here.
We understand that the road vehicles that carry passengers are not to be charged Purchase Tax. If that is so, why is it that the London taxicab, which is specially designed for carrying passengers on a commercial basis, is charged with Purchase Tax? It would not have been necessary to raise fares to the same extent if the Purchase Tax had been removed, as we asked some time ago. I ask the Chancellor of the Exchequer to include London taxicabs with other passenger vehicles, and exclude them from Purchase Tax.

Mr. Foster: This Schedule is drafted is a very complicated way. I would ask the Committee to look at paras. 2, 3, 4, and 5 of Part II in particular, when they will realise that it is extremely difficult indeed to follow. Part II is designed to get the Purchase Tax refunded where somebody has paid it on a vehicle caught by the old Bill but not by the Bill as amended. That is clear, because it says so at the top, more or less. But when you try to follow it out, Part II begins by saying that this Part applies to certain vehicles, and goes on to say:
the expression 'relevant vehicle' means a vehicle to which this part of the Schedule applies.
That is bad enough, but then the draftsman really gets into his stride. What he is trying to say is that where somebody has paid more for a vehicle after Budget day than before Budget day, the difference shall be refunded, but it

is to be reduced by the amount the person would be liable to under this Bill. The draftsman has had a very difficult time doing that, and says the amount shall be refunded other than the buyer's
prospective liability by virtue of this Act to purchase tax in respect of the vehicle;
Surely something better than that could be done. One of the main fallacies of this Schedule is that it does not start off by defining a chassis. That is the first thing that should be done. Then the strictures of my hon. Friend the Member for Devizes (Mr. Hollis) would be turned away to some extent, because it would be clear that the driver's cab, the accumulator, and the coupling gear, would not be part of the chassis.
It reminds me of a case in the House of Lords known as Noble v. Harrison, in which it was said, in one part of the judgment
It is quite clear that a falling branch is not a tiger, nor is it sewage.
It was clear to the judge, and, possibly, clear to us. You get into this difficulty by trying to define positive things by negatives. Obviously, there are lots of other things which a chassis "are not." The draftsman's imagination has stopped very short. A chassis is not either a roof, or a house, or many other things. If he wants to go further, and say what things shall be deemed to be an addition to the chassis, he could go on very much longer. What he wants is a definition Clause. He has to be careful not to define it in the way the definition is in the Dogs Act, 1926, where it is written:
The expression 'cattle' in the Dogs Act. 1923, shall be deemed to include "poultry.
The other warning I should like to give the right hon. and learned Gentleman is the definition in a Victorian Act which says that a well 100 feet deep shall be deemed to be a building 100 feet high. None of these definitions, when in keeping with the imagination of this particular draftsman, should be adopted. Joking apart, my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) is absolutely right when he says that if the Government are determined to have this tax on chassis they really should withdraw this Schedule and draw up a simpler one, so that we know where we are. They should start off by defining a chassis in the first place, and then, with regard to the recovery of Purchase Tax, it should


state that where a man paid Purchase Tax on a vehicle to which this Act applies he should get his Purchase Tax back.

Sir H. Williams: This discussion sent me to look up the Finance Act, 1948, and Group 35 in the Schedule and some of the items there, are, curiously enough, repeated in this Schedule. For instance, there are mobile cinemas and sound film production vehicles. There is a curious inconsistency, however, for in the 1948 Act we read:
Mobile canteen, mobile clinics, travelling libraries, travelling shops, travelling show rooms and similar vehicles.
All these are not mentioned in the present Bill, for there we have:
Mobile canteens and shops, mobile clinics and travelling libraries.
All sorts of things are included and excluded, and it can only be because the draftsman had to do the job in a hurry. I have only glanced at it in the short time I had, but it seems to me that the whole thing is more stupid than I thought, because in 1948 I see that bullion vans were to be exempt but in 1950 are to be taxed. That is, I suppose, because the Chancellor of the Exchequer is the only one who, today, commands all such vans.

The Solicitor-General: I do not think that the drafting of this Schedule merits the strictures which have been passed on it by some Members of the Committee. It is nothing like as difficult as has been made out, but if comments are made such as have been made by hon. Members opposite it can be made to look ridiculous. Part II of the Schedule, which has been referred to, lays down that where somebody has sold a commercial vehicle thinking that Purchase Tax was to be charged on it, the buyer who has paid the extra money is entitled to get it back.
Hon. Members asked why there was no definition of chassis. I think the term "chassis" is well understood in the motor trade and outside it, but the device which the draftsman has used is, in effect, to substitute something which amounts to a definition, by saying what is to be regarded as part of the chassis and what is not. He does that in paragraph 1 (2), and he says that the driver's cab, the accumulators and so on are not to be considered as part of the chassis when considering what is the

wholesale value, on which the proposed tax is charged.
The hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) asked if trailers are included. They are not, for the simple reason that they are not mechanically propelled vehicles. Then he asked what were the vehicles referred to in paragraph 3 (2, a). These are passenger vehicles as described in Clause 35 of Part I, and hon. Members will see that the reference is to passenger vehicles. The hon. Member asks why refer to passenger vehicles at all? For the simple reason that goods vehicles might carry passengers and goods as well. When we refer to goods vehicles we want to make sure that we are excluding passenger vehicles.
3.30 a.m.
With regard to the expression "chassis," it is a one-piece vehicle and I would have thought it a term reasonably clear in itself. With regard to paragraph 4, that simply provides where one has a chassis on which tax has been paid, and it is subsequently built into a vehicle which does not attract Purchase Tax, one can get the tax paid on the chassis back. If hon. Gentlemen opposite analysed the drafting in a rather less sceptical mood, they would see that the draftsmen have brought about, I will not say in simple, but in comparatively simple language, exactly what is intended.

Mr. H. Strauss: The right hon. and learned Gentleman the Solicitor-General, who is generally the most courteous and careful of Ministers, has not done himself justice on this occasion. I am certain I can satisfy all Members of the Committee who will take the trouble to listen. The point is simple and can be understood by every layman as well as by lawyers. I agree with the Solicitor-General that he may want to set out in Part II what would have been the position under the Bill as originally introduced, but then he must do it in words that explain what that position is. What is intolerable is for him to do it by reference, by saying:
1.—(1) This Part of this Schedule applies to vehicles which—

(a) are not chargeable goods under Group 35 in Part I of the Eighth Schedule to the Finance Act, 1948; but
(b) would have been so if the Bill for this Act as originally presented to the House of Commons had been passed without amendment;


and in respect of which purchase tax would have been chargeable if that Bill had been so passed."

I put it to the Chancellor of the Exchequer, who is himself so distinguished a lawyer—and he will agree—that, if anyone wished to advise a client on what would be the position under the Bill as originally drafted, he would have to have the whole of that Bill before him. There would be no other safe way of doing it at all. I challenge either the Chancellor of the Exchequer or the Solicitor-General to deny that proposition. Therefore, I put this simple, straight question to the Solicitor-General when I spoke before. I asked him whether this Bill as originally introduced was to be annexed as a schedule to this Finance Bill as finally passed, so that it would be printed in the volume of Statutes available to judges and practitioners.
As I see it, and I hope I am not making an unfair point, the Government are faced with this simple dilemma. Either they are not going to print this Bill as originally introduced in the volume of the Statutes, in which case it will be impossible for anybody reading the Finance Act to find what the thing means. They will have to get a long additional document from somewhere else, perhaps from His Majesty's Stationery Office. Or if they print the whole thing complete, then anybody who wants to find out what it means has to read a whole Act of Parliament and also the whole Bill as originally introduced.
In the interests of the reputation of this Parlament, this House and Committee, I beg the right hon. and learned Solicitor-General to address himself to the substance of this complaint. I ask him whether he can find any precedent in any Act of Parliament at all for lines 84 and 85 as they stand in this Schedule. If he cannot find any precedent, or answer to that simple question I have put to him, then it is intolerable to ask the Committee to accept this Schedule.

Sir Patrick Spens: May I reinforce what my hon. and learned Friend has just said? As far as I know there has never been a definition in an Act of Parliament for which one would have to go to the Bill as originally introduced. I know of no precedent. This is a definition Clause, defining vehicles. Could the Solicitor-General

say whether any layman could purchase a copy of a Bill introduced to this House but which had never become law, assuming he wished to advise a client or present an argument to the courts?

Mr. Boyd-Carpenter: The Solicitor-General made no reference to the points to which my hon. and learned Friends the Members for Norwich, South (Mr. H. Strauss) and Kensington, South (Sir P. Spens) again referred. I do not think we can pass from the matter until we are told what the Government intend to do about this. The whole purpose of paragraph 2 is to show to which vehicles it is intended to refer and that is the only purpose for having it here. But when it is taken by itself it does not tell one anything: it merely refers to the Bill as originally introduced to the House. The Solicitor-General knows perfectly well that as time passes it will be a matter of extreme difficulty to obtain a Bill. A Bill in its original form is extremely difficult to obtain when the Act has passed to the Statute Book.
There is a second consideration, and that is that the Act in its present form will refer to something which has no statutory form at all. If this is to mean anything the original Bill will have to be scheduled to the final Act and not merely a part of it, for it says:
and in respect of which Purchase Tax would have been chargeable if that Bill had been so passed.
No one can be certain that Purchase Tax would have been so chargeable, unless and until he has seen the Bill to which reference has been made. As a matter of drafting this will not do. It is a matter for the Government if they care to make fools of themselves. They have done so before, and will no doubt, if they remain, do so again. But it is a different thing when they try to make fools of the House and the Committee. People outside, of all political views and none, will undoubtedly consider that the Committee will make a consummate fool of itself if it allows this Schedule to be placed on the Statute Book.

The Solicitor-General: Perhaps I can shorten this discussion a little by saying that I will certainly pay attention to the points raised by the hon. and learned Member for Norwich, South (Mr. H. Strauss) and the hon. and learned Member


for Kensington, South (Sir P. Spens). We will see whether we can improve the actual words of the subsections about which there has been complaint. I was asked whether there was a precedent for this kind of thing. In the Finance Act of 1947 there is a reference to a Ways and Means Resolution. But we will see what we can do regarding that particular piece of drafting. We may have to make it longer, but it will be easier to refer to. There is one other point. This is not part of a Schedule which will have permanent application. It will only apply to a limited number of contracts entered into within a very limited space of time, and it will soon have spent its force.

Sir H. Williams: The Solicitor-General said that the vehicles are described as passenger vehicles. But if he will turn to the words of the new Schedule he will find that it refers to:
vehicles of the following descriptions which are designed and permanently fitted solely or mainly for a function other than the carriage of passengers or goods …
These vehicles would also carry people. Therefore, these things are substantially

the same. I would ask him to consider my point as well.

The Solicitor-General: I was referring to section 35 (a) of the Finance Act, 1938.

Mr. H. Strauss: I wonder if I might shorten the Debate by one question to the Solicitor-General. I think his reference to the Ways and Means Resolution was not a very close parallel, because that is something which, at any rate at one time, had the force of law. What I am going to ask him is whether the meaning of what he said when he promised to reconsider this piece of drafting was that he will put into this Schedule something which makes it unnecessary to consider the law as it would have been if the Bill as originally introduced had been passed. If that is what he means I think it will be possible for us to make progress. But, if that is not the case, I think it puts some of us into a difficult position.

Question put, "That the Schedule be read a Second time."

The Committee divided: Ayes, 202; Noes, 183.

Division No. 45.]
AYES
[3.46 a.m.


Acland, Sir Richard
Davies, Harold (Leek)
Herbison, Miss M


Adams, Richard
Davies, S. O. (Merthyr)
Hewitson, Capt. M


Albu, A. H
Deer, G.
Hobson, C. R.


Allen, A. C. (Bosworth)
Delargy, H. J.
Holmes, H. E. (Hemsworth)


Awbery, S. S.
Dodds, N. N.
Houghton, Douglas


Ayles, W. H.
Donnelly, D.
Hudson, J. H. (Ealing, N.)


Bacon, Miss A.
Driberg, T. E. N
Hughes, Emrys (S. Ayr)


Baird, J.
Ede, Rt. Hon. J. C.
Hughes, Hector (Aberdeen, N.)


Bartley, P.
Edelman, M.
Hughes, Moelwyn (Islington, N.)


Berwick, F.
Edwards, John (Brighouse)
Hynd, H. (Accrington)


Bing, G. H. C.
Edwards, W. J. (Stepney)
Hynd, J. B. (Attercliffe)


Blackburn, A. R.
Evans, Albert (Islington, S.W.)
Irving, W. J. (Wood Green)


Blenkinsop, A.
Evans, E. (Lowestoft)
Janner, B.


Boardman, H.
Evans, S. N. (Wednesbury)
Jay, D. P. T.


Booth, A.
Ewart, R.
Jenkins, R. H.


Bowden, H. W.
Fernyhough, E.
Johnson, James (Rugby)


Bowles, F. G. (Nuneaton)
Field, Capt. W. J.
Jones, D. T. (Hartlepool)


Braddock, Mrs. E. M.
Finch, H. J.
Jones, Jack (Rotherham)


Brook, D. (Halifax)
Freeman, J. (Watford)
Jones, William Elwyn (Conway)


Brooks, T. J. (Normanton)
Freeman, Peter (Newport)
Keenan, W.


Broughton, Dr. A. D. D.
Gaitskell, Rt. Hon. H. T N
Kenyon, C.


Brown, T. J. (Ince)
Gibson, C. W.
Key, Rt. Hon. C W


Burton, Miss E.
Gordon, Walker, Rt. Hon. P. C.
King, H. M.


Butler, H. W. (Hackney, S.)
Greenwood, A. W. J. (Rossendale)
Kinley, J.


Champion, A. J.
Greenwood, Rt. Hn. Arthur (Wakefield)
Lee, F. (Newton)


Chetwynd, G. R
Grey, C. F.
Lever, L. M. (Ardwick)


Clunie, J.
Griffiths, D. (Rother Valley)
Lindgren, G. S


Coldrick, W.
Griffiths, W. D. (Exchange)
Lipton, Lt.-Col. M.


Collick, P.
Gunter, R. J.
Longden, F. (Small Heath)


Collindridge, F.
Hale, J. (Rochdale)
MacColl, J. E.


Cooper, G. (Middlesbrough, W.)
Hale, Leslie (Oldham, W.)
Mackay, R. W. G. (Reading, N.)


Cooper, J. (Deptford)
Hall, J. (Gateshead, W.)
McLeavy, F.


Cove, W. G.
Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
McNeil, Rt. Hon. H.


Craddock, George (Bradford, S.)
Hamilton, W. W.
MacPherson, Malcolm (Stirling)


Cripps, Rt. Hon. Sir S.
Hannan, W.
Mainwaring, W. H.


Crosland, C. A. R.
Hardman, D. R
Mallalieu, E. L. (Brigg)


Cullen, Mrs. A.
Hardy, E A.
Mallalieu, J. P. W (Huddersfield, E.)


Daines, P.
Hargreaves, A
Manuel, A. C.


Darling, G. (Hillsboro')
Harrison, J.
Mellish, R. J.


Davies, A. Edward (Stoke, N.)
Hastings, Dr. Somerville
Messer, F.


Davies, Ernest (Enfield, E.)
Hayman, F. H.
Mitchison, G. R




Moeran, E. W
Richards, R.
Vernon, Maj W F


Monslow, W.
Robens, A.
Viant, S. P.


Moody, A. S.
Roberts, Goronwy (Caernarvonshire)
Wallace, H. W


Morris, P. (Swansea, W.)
Robertson, J. J. (Berwick)
Watkins, T E


Moyle, A.
Robinson, Kenneth (St. Pancras, N)
Weitzman, D


Mulley, F. W
Rogers, G. H. R. (Kensington, N.)
Wells, P. L. (Faversham)


Murray, J D.
Ross, William (Kilmarnock)
Wells, W. T. (Walsall)


Nally, W
Royle, C.
White, Mrs. E. (E. Flint)


Neal, H.
Shackleton, E. A. A.
While, H. (Derbyshire, N. E.)


Orbach, M.
Silverman, J. (Erdington)
Whiteley, Rt. Hon. W


Paling, Rt. Hon. Wilfred (Dearne V'lly)
Silverman, S. S. (Nelson)
Wilcock, Group-Capt C. A. B


Paling, Will T. (Dewsbury)
Simmons, C J
Wilkes, L.


Pannell, T. C
Slater, J
Wilkins, W. A.


Pargiter, G. A
Snow, J. W.
Willey, F. T (Sunderland)


Paton, J
Sorensen, R. W
Willey, O. G. (Cleveland)


Pearson, A
Soskice, Rt. Hon. Sir F
Williams, D. J. (Neath)


Peart, T. F.
Steele, T.
Williams, Ronald (Wigan)


Poole, Cecil
Stewart, Michael (Fulham, E.)
Williams, W. T (Hammersmith, S.)


Porter, G.
Stross, Dr. B.
Wilson, Rt. Hon. J. H. (Huyton)


Price, M. Philips (Gloucestershire, W.)
Sylvester, G. O.
Winterbottom, I. (Nottingham, C.)


Proctor, W T.
Taylor, R. J. (Morpeth)
Winterbottom, R. E. (Brightside)


Pursey, Comdr. H
Thomas, D. E. (Aberdare)
Wise, Major F. J


Rankin, J
Thomas, George (Cardiff)
Woods, Rev. G. S


Rees, Mrs. D
Thomas, I. O. (Wrekin)
Yates, V. F.


Reeves, J.
Thorneycroft, Harry (Clayton)
Younger, Hon. Kenneth


Reid, T. (Swindon)
Timmons, J.



Reid, W (Camlachie)
Tomney, F.
TELLERS FOR THE AYES:




Mr. Popplewell and Mr. Sparks.




NOES


Aitken, W. T.
Galbraith, T. G. D. (Hillhead)
Maude, J. C. (Exeter)


Alport, C. J. M.
Gates, Maj. E. E.
Maudling, R


Amory, D. Heathcoat (Tiverton)
Gridley, Sir A.
Mellor, Sir J


Arbuthnot, John
Grimston, Hon. J. (St. Albans)
Moore, Lt.-Col. Sir T


Ashton, H. (Chelmsford)
Grimston, R. V. (Westbury)
Morrison, Maj. J. G. (Salisbury)


Astor, Hon. M.
Harris, F. W. (Croydon, N.)
Morrison, Rt. Hon. W. S. (Cirencester)


Baldock, J. M.
Harris, R. R. (Heston)
Nabarro, G.


Baldwin, A. E.
Harvey, Air-Codre, A. V. (Macclesfield)
Nicholls, H.


Banks, Col. C.
Hay, John
Nield, B. (Chester)


Baxter, A. B.
Heald, L. F.
Nutting, Anthony


Beamish, Maj. T. V. H
Hicks-Beach, Maj. W. W.
Oakshott, H. D


Bell, R. M.
Higgs, J. M. C.
Odey, G. W.


Bennett, R. F B (Gosport)
Hill, Mrs. E. (Wythenshawe)
Ormsby-Gore, Hon. W. D.


Birch, Nigel
Hill, Dr. C. (Luton)
Perkins, W. R. D.


Bishop, F. P
Hinchingbrooke, Viscount
Peto, Brig. C. H. M.


Black, C. W.
Hirst, Geoffrey
Pickthorn, K.


Boyd-Carpenter, J. A.
Hollis, M. C.
Powell, J. Enoch


Bracken, Rt. Hon. Brendan
Holmes, Sir J. Stanley (Harwich)
Prescott, Stanley


Brains, B.
Hopkinson, H L. D'A
Price, H. A. (Lewisham, W.)


Braithwaite, Lt.-Comdr. J. G.
Hornsby-Smith, Miss P.
Profumo, J. D


Bromley-Davenport, Lt.-Col. W.
Howard, G. R. (St. Ives)
Raikes, H. V


Brooke, H. (Hampstead)
Howard, S. G. (Cambridgeshire)
Redmayne, M.


Browne, J. N. (Govan)
Hudson, Sir Austin (Lewisham, N.)
Renton, D L. M.


Buchan-Hepburn, P. G. T.
Hudson, W. R. A. (Hull, N.)
Robinson, J. Roland (Blackpool, S.)


Bullock, Capt. M.
Hulbert, Wing-Cdr. N. J.
Robson-Brown, W. (Esher)


Burden, Squadron-Leader F. A
Hutchinson, Geoffrey (Ilford, N.)
Rodgers, John (Sevenoaks)


Carr, L. R. (Mitcham)
Hyde, H. M.
Roper, Sir H


Channon, H.
Hylton-Foster, H. B.
Russell, R. S


Clarke, Col. R. S. (East Grinstead)
Jones, A. (Hall Green)
Ryder, Capt. R E D


Clarke, Brig. T. H. (Portsmouth, W.)
Kaberry, D.
Scott, Donald


Colegate, A.
Lancaster, Col. C G
Smiles, Lt.-Col. Sir W


Conant, Maj. R. J. E.
Langford-Holt, J.
Smith, E. Martin (Grantham)


Cooper, A. E. (Ilford, S.)
Leather, E. H. C.
Smithers, Peter H. B. (Winchester)


Corbett, Lieut.-Col. U. (Ludlow)
Legge-Bourke, Maj. E. A H
Smithers, Sir W (Orpington)


Craddock, G. B. (Spelthorne)
Lindsay, Martin
Smyth, Brig. J. G. (Norwood)


Cranborne, Viscount
Llewellyn, D.
Soames, Capt. C.


Crosthwaite-Eyre, Col. O E.
Lloyd, Rt. Hon. G. (King's Norton)
Spearman, A. C. M


Crouch, R. F.
Lloyd, Selwyn (Wirral)
Spence, H. R. (Aberdeenshire, W)


Crowder, F. P. (Rulslip-Northwood)
Lookwood, Lt.-Col. J. C
Spens, Sir P. (Kensington, S.)


Darling, Sir W. Y. (Edinburgh, S.)
Longden, G. J. M. (Herts, S. W.)
Stanley, Capt. Hon. R. (N. Fylde)


Davidson, Viscountess
Lucas, P. B. (Brentford)
Stevens, G. P.


Davies, Nigel (Epping)
Lucas-Tooth, Sir H.
Strauss, Henry (Norwich, S.)


de Chair, S.
Lyttelton, Rt. Hon. O.
Stuart, Rt. Hon. J. (Moray)


Deedes, W. F.
McCorquodale, Rt. Hon. M S
Summers, G S


Digby, S. Wingfield
Macdonald, Sir P. (I. of Wight)
Sutcliffe, H.


Drayson, G. B
Mackeson, Brig. H. R.
Taylor, C. S. (Eastbourne)


Drewe, C
McKie, J. H. (Galloway)
Taylor, W. J. (Bradford, N.)


Dugdale, Maj. Sir T. (Richmond)
Maclay, Hon. J. S.
Teeling, William


Duthie, W. S.
MacLeod, Iain (Enfield, W.)
Thomas, J. P. L. (Hereford)


Elliot, Lieut.-Col. Rt. Hon. Walter
Macpherson, N. (Dumfries)
Thompson, R. H. M (Croydon, W.)


Erroll, F. J.
Maitland, Comdr. J. W
Thorneycroft, G. E. P (Monmouth)


Fisher, Nigel
Marlowe, A. A. H.
Thornton-Kemsley, C N


Foster, J. G.
Marshall, D. (Bodmin)
Tilney, John


Fraser, Hon. H. C. P. (Stone)
Marshall, S. H. (Sutton)
Touche, G C


Galbraith, Cmdr. T. D. (Pollok)
Maude, A. E. U. (Ealing, S.)
Turton, R. H.







Vane, W. M. F.
Ward, Miss I. (Tynemouth)
Wilson, Geoffrey (Truro)


Vaughan-Morgan, J K
Waterhouse, Capt. C.
Wood, Hon. R


Vosper, D. F.
Watkinson, H.
York, C.


Wakefield, E. B. (Derbyshire, W.)
Webbe, Sir H. (London)
Young, Sir A. S. L.


Wakefield, Sir W. W. (St. Marylebone)
Williams, Gerald (Tonbridge)
TELLERS FOR THE NOES:


Walker-Smith, D. C.
Williams, Sir H. G. (Croydon, E.)
Mr. Studholme and


Ward, Hon. G. R. (Worcester)
Wills, G.
Major Wheatley.

Mr. H. Strauss: I beg to move, as an Amendment to the proposed Schedule, to leave out lines 20 and 21.
These words will be found in Paragraph (3) of subsection 1 of Part I of this Schedule. Paragraph (3) runs as follows:
Subject to the last foregoing sub-paragraph, it shall be for the Commissioners to determine for any chassis or type of chassis what parts and accessories are, for the purposes of this paragraph, to be deemed to belong to a complete chassis or to be additions thereto."—
and then the words that I propose should be left out—
and what type of any part or accessory deemed to belong to a complete chassis a chassis lacking that part or accessory is to be treated for those purposes as having.
Anybody who thinks these words are not difficult to construe will be able to correct his view by asking his neighbour what he thinks they mean. I believe I have discovered what they mean. I will suggest the meaning to the Government and they will, no doubt, tell me if I am right in my interpretation. If I am, I think they will say that the words I suggest would no doubt state the meaning more clearly.
In proposing to leave the words out I am criticising the drafting. I think it becomes as nearly as possible incomprehensible in those two lines I have read and, indeed, in this Schedule generally. I should like to make it absolutely clear, as I have done before, and many hon. Members will agree with me, that I do not share in any general fun-making of the draftsmen. They work under extreme pressure; they work with extreme skill; and, in fact, they are very much overworked. What I suggest, however, is that in those two lines they have, in fact, failed.
I was a little encouraged in raising these points by the fact that an hon. Member opposite had an interesting letter in yesterday's "Times" on the subject of drafting; I refer to the hon. Member for the Test Division of Southampton (Dr. King) and he quite rightly made a protest against language of obscurity.

What I believe these words mean is this: "… and the Commissioners may determine what type of any part or accessory shall be deemed to belong to a complete chassis, whether in fact the chassis has that part or accessory or not." I suggest if that is what it means, it would be simpler to say so. If not, at least let some comprehensible words be put in the place of the words now there.

The Solicitor-General: I think those two lines are absolutely necessary and, I would submit, they are quite clear in their purport. Suppose a chassis leaves the manufacturer incomplete. As we charge tax on the value of the complete chassis, we have to decide in regard to the missing parts what type we would assume would belong to that chassis. If the chassis be fitted with a more or less expensive part on it the Commissioners have to decide what would be the appropriate type of missing part to fit into that chassis. They decide that tax can be charged upon the value of the complete chassis having that type of part.

Amendment negatived.

4.0 a.m.

Sir Austin Hudson: I beg to move as an Amendment to the proposed Schedule, in line 52, to leave out "(but not including hearsettes)."
I asked a number of people what a hearsette was, and I never discovered any friend of mine who knew. So I rang up an undertaker and he told me this vehicle was constructed to take coffins as well as mourners. If the Chancellor sees fit to exclude hearses, why does he not exclude hearsettes? In other words, why, if the corpse travels alone should it be exempt from Purchase Tax while, when it is accompanied, it has to pay tax? I expect the Government will argue that the vehicle could be used for other purposes, but could not a hearse equally be used for other purposes? I have, in fact, seen one being used for carrying goods other than those for which it was designed. I do not see why the hearsette should be singled out.
I need not argue the matter at length, but I would point out that neither hearses nor hearsettes are always constructed originally for that purpose. We all know that most of those we have seen are old vehicles of the Daimler or Rolls Royce type which have been adapted for the purpose. If some enterprising person wants to make an impressive hearsette for use in his part of the country, we do not see why he should not do so. If a hearse is excluded we do not see why a hearsette should not be excluded, too.

Mr. Jay: I am happy to say that we are able to accept this Amendment. I hasten to add that our doing so will not have the slightest effect. Being vehicles which are interchangeable with ordinary passenger vehicles, hearsettes are already taxed under group 35 in Part I of the Schedule to the Finance Act of 1948 and, therefore, there is no need to ensure that they are taxed here by excluding them from exemption.

Amendment agreed to.

Mr. Geoffrey Wilson: I beg to move, as an Amendment to the proposed Schedule, in line 58, at the end to insert:
unless such composite vehicle is one of the other excepted vehicles comprised in subhead (c) of sub-paragraph (2) of paragraph 3 of Part I of this Schedule.
This attempts to overcome what appears to be an anomaly. As the Schedule is at present drafted, it appears that certain types of vehicle are exempted from taxation under sub-paragraph (c). Under sub-paragraph (d) tractors and locomotives are also exempt. They are not exempt, however, if they are designed for use as part of a composite vehicle. That is notwithstanding the fact that a composite vehicle might be a vehicle used for one of the purposes set out in subparagraph (c).
It might so happen that a vehicle was constructed as a refuse collecting vehicle and, in fact, some refuse collecting vehicles are composite vehicles. It would appear that a refuse collecting vehicle is exempt if it is only one vehicle, and it is certainly exempt if it consists of a tractor and a trailer, but if it happens to be a composite vehicle it is subject to taxation, which seems to me to be illogical. The use of composite vehicles is something which should be encouraged, not discouraged.

These vehicles are extremely useful for certain classes of traffic. In congested traffic they turn easily and they take less room than any specialised vehicle which is not composite. The composite vehicle is also of great value where a vehicle has to wait a long time loading or unloading.
A good number of the vehicles mentioned in sub-paragraph (c) might very well be composite. It might well be useful to have a canteen attached to a detachable motor. This is not an academic point, because the Committee will remember that under the Factories Acts Regulations works of engineering construction are subject to the provisions of the Acts and contractors are now liable to provide such things as canteens and lavatories at all sorts of sites away from buildings. It may well be that some of these facilities have to be provided in mobile form and that composite vehicles would be very useful for such purposes. Therefore, I suggest that it is illogical that this very useful type of vehicle should be subject to tax when a single vehicle is not.

Mr. Jay: The hon. Gentleman's Amendment seeks to exempt the motive unit of the articulated vehicle. As he rightly stated, as the Schedule now stands, the motive unit of the non-articulated vehicle, known as the towing vehicle, is exempt under sub-paragraph (d) to subsection 2, whereas the motive unit of the articulated vehicle is subject to tax. That does appear to be illogical on the face of it, but the reason is that the motive unit of the articulated vehicle is in fact capable of use as a general purpose haulage unit on the roads, and there it is just as suitable for this tax as any other road vehicle.

Mr. G. Wilson: It is appreciated that this Amendment would only apply to articulated vehicles used for the purposes of sub-paragraph (c), such as the accepted purposes of travelling lavatories, canteens, and so on.

Mr. Jay: Certainly, but my point is that these motive units are capable of use for general haulage on the roads. Tractors and locomotives, on the other hand, under sub-paragraph (d)—that is, towing units, in the case of the non-articulated units—are used almost entirely on farms, and for


farm purposes, and for that reason we wish to exempt that type on the general principle of not taxing vehicles mainly used on farms and in woodland country. Therefore, I think it is perfectly logical to extend the tax to what is a general purpose road haulage vehicle, and exempt the tractors and locomotives used on the farm.

Mr. P. Thorneycroft: That explanation seems to me to reveal clearly the extraordinary muddle the Government have got into. The Financial Secretary says: "Never mind, the vehicle concerned is intended to be excluded on no rule of logic," and so, by the merest accident of design, as the vehicle happens to be a semi-articulated vehicle, it has to bear 33⅓ per cent. Purchase Tax, whereas if a towing vehicle and a trailer were used it would not have to pay tax at all.
It is an extraordinary sort of tax law to impose on vehicle manufacturers. I do not know whether it is worth while dividing on this matter—I am willing to do so on the slightest provocation—but I think we might content ourselves with calling the Committee's attention to the incredible stupidity of a tax of this kind.

Mr. David Kenton: Can the Financial Secretary give the Committee some idea how his remarks are to be applied to the justification which the Government used for having this Purchase Tax? Can he say how the fine distinction he has made has any relation whatever to the export trade? Can he say whether these articulated vehicles which he describes as being capable of use for general haulage on roads are vehicles which he wishes to divert to the export trade; and whether, on the other hand, the towing units are units which he is not in the least interested in having exported? If we could have an answer to that it would enable us to clarify our minds.

Mr. Jay: I should have thought that the answer, like the question, was quite simple. We seek to restrict investment on road goods vehicles. The articulated vehicle is a general purpose road goods vehicle, and therefore comes within the general principles of the tax.

Amendment negatived.

Sir W. Wakefield: I beg to move, as an Amendment to the proposed Schedule, in line 58, at the end, to insert:
(c) battery electric vehicles designed and permanently fitted solely or mainly for the carriage of goods.
Various arguments have been advanced for putting Purchase Tax on goods commercial vehicles because of their use of petrol. Obviously it is intended to stop the purchase of these vehicles and thus save fuel and the dollar content in it. Such arguments cannot be used about battery electric vehicles, because they do not use fuel. The argument for diverting the carriage of goods from the road to the rail by limiting commercial vehicles on the road and putting Purchase Tax on them cannot be used in the case of these electric vehicles, because their radius of operation is very limited, and they are supplementary and complementary to railway transport, and do not take away any traffic from the railways.
Another reason for putting the tax on commercial vehicles was to divert more such vehicles to the export trade by keeping them off the home market. Such an argument does not apply to electric vehicles, because there is no export trade in this type of vehicle, nor is there any demand abroad for them. There is a positive advantage in giving encouragement to the production and operation of battery electric vehicles because the British Electricity Authority wants to even out its load. When these electrical vehicles have their batteries charged, it is done at night-time when the peak load is at its lowest, and therefore it is a positive advantage that these vehicles should be encouraged to be used in the transportation of goods. At the same time it will be an advantage to the British Electricity Authority in helping them to even out the load at night-time. For these various reasons, I hope that the Chancellor of the Exchequer will favourably consider this Amendment.

4.15 a.m.

Mr. Jay: This is the most important point raised by this series of Amendments. We considered very carefully, in consultation with the trade, the position of these electrical vehicles, that consultation and consideration having taken place in the interval between the Budget and the introduction of the Finance Bill. Indeed,


it was that consideration, amongst others, which led us to decide to transfer the tax to the chassis, which is a considerable relief for electrical vehicles, but we do not think that a case has been made for exempting the vehicles altogether.
The hon. Member for St. Marylebone (Sir W. Wakefield) said that there were no exports of electrical types of vehicles. I have made careful inquiries about that, and from information given to me it would seem that the fact is that there are small exports. There are definitely some, and it may be that those exports, with sufficient effort, could be increased.

Mr. P. Thorneycroft: Is there any evidence at all that they could be increased?

Mr. Jay: It is a matter of opinion. They have been increased, and some people think they could be further increased.
However, the deciding factor is that electrical vehicles are obviously in competition with the ordinary petrol goods vehicle, and it would not be in accordance with the principles of Purchase Tax to exempt them. It would not be practical to put this heavy tax on one type of vehicle and exempt altogether another type of vehicle which is in direct competition with it. I expect the Society of Motor Manufacturers and Traders would take the same view.
I would remind the hon. Member of the concession we have made by transferring the tax to the chassis, which has gone a long way to meet the arguments put forward by the manufacturers of these vehicles. In the first place, the battery is now exempt, and I understand that is a considerable part of the cost. The pedestrian controlled vehicles, which we have added to the exempt list, are almost entirely electrical vehicles. We have gone part of the way to meet the argument, but I am afraid we cannot exempt these vehicles entirely.

Mr. Boyd-Carpenter: The Financial Secretary to the Treasury, at twenty past four in the morning, expounds a new taxation policy. He said that because His Majesty's Government, which for reasons which to them seem adequate, are going to impose a Purchase Tax on petrol-driven vehicles, therefore it follows that they should also impose it on

electrically-driven vehicles, even though the factors which have influenced the Government to tax the one do not apply to the other. That shows the difficulties in which the Government have got themselves on this whole matter. They are now driven to tax vehicles for which—and the Financial Secretary's speech is the best evidence—there is no case at all just because some other class of vehicle has been taxed.
There is one thing which, I must confess, the Financial Secretary's speech has made clear to me. The lack of argument that he has been able to adduce on this point is a very clear explanation of why the Lord President of the Council has arranged for these Debates to be taken in the middle of the night, when, in accordance with his usual practice, the Lord President of the Council is comfortably tucked up in bed.

Amendment negatived.

Mr. Maudling: I beg to move, as an Amendment to the proposed Schedule, in line 59, at beginning, to insert "agricultural, horticultural."
It will be convenient, with permission, to couple with this Amendment the two subsequent Amendments. The effect of these three Amendments would be to exempt from the new tax all agricultural and horticultural vehicles designed primarily for use on farms. Already a large number of vehicles used on farms are exempt. Tractors are exempt, and in the course of the discussions in this Committee the Government have extended the exemption to vehicles of the "Land Rover" type. The reason for that extension was given by the Financial Secretary, as follows:
The second additional exemption we propose is for the class of vehicle known as the "Land Rover" type. Those are light vehicles but are designed mainly not for use on the road; but on rought ground on farms, woodlands and so on. We think they can reasonably be distinguished from ordinary road vehicles for the purposes of this tax."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 583.]
The purpose of the Amendments is to extend that principle to all other vehicles designed primarily for use on farms which cannot be described as ordinary road vehicles. The Government's Amendment was drawn very narrowly and leaves out a number of similar vehicles. I quote one example which has arisen in my constituency


—a vehicle manufactured there which goes by the name of Motocart. I have received a number of pamphlets on this vehicle and have sent them to the hon. Gentleman for his information.
It is a small three-wheeled truck with a maximum speed of 12 m.p.h. and is driven by a large single wheel in front. It is designed entirely for use on farms, for doing such jobs as carting, muck spreading and circulating fertilisers. It is designed to take the place of the cart and to do jobs for which a light tractor is often used, and do them more economically. Certainly some of these are used for industrial purposes, but I am informed that 95 per cent. of them are used on farms for farming purposes, and I think this is the sort of vehicle that comes within the principle enunciated by the Financial Secretary.
This is only one example of many similar vehicles that must be manufactured in the country for use on farms. Therefore, the Amendment has the purpose of extending the principle underlying the "Land Rover" exemption to all similar vehicles.

Mr. Jay: It did not appear to us that this Amendment was necessary, because our intention had been that all vehicles used mainly on farms should be exempt. As the hon. Gentleman said, all agricultural machinery proper is exempt in that it does not come under the heading of road vehicles. We have also exempted tractors and locomotives in paragraph (2, d) of the Schedule, and we have included the "Land Rover." It therefore appears that the only vehicles used on farms which are taxable are general road lorries and vans which are normal road vehicles. I think the Committee will agree that these should be taxed. If it turns out, as the hon. Member suggests, that other vehicles not covered come within the definition are vehicles which are mainly and normally used on farms, I am prepared to consider including them. We have, of course, taken power to vary the exemptions by Treasury order, and it would be possible to do this.

Mr. Thorneycroft: Would it not be very much better simply to say so in the Bill? Why should agricultural vehicles be excluded when trucks used for other purposes are included? In paragraph (e)

there are excluded "industrial and works trucks designed primarily for use in factories, docks, yards, railway stations or warehouses." The hon. Gentleman said fairly—and I fully accept it—that his intention is to exclude trucks primarily designed for uses such as the vehicles which my hon. Friend the Member for Barnet (Mr. Maudling) mentioned. If that is so, surely the right and proper thing is to put it into an Act of Parliament, but if there is some reason for not doing so, I hope the Financial Secretary will tell us.

Mr. Maudling: The Financial Secretary said that if evidence could be produced that there were vehicles designed primarily for use on farms not covered by this Schedule, the Government would look at it. I think I have produced evidence that there are vehicles which are not covered, and if he will give an assurance that the Government will have a look at the matter before the Report stage, I beg to ask leave to withdraw the Amendment.

Mr. Jay: Certainly we will look at the evidence before the Report stage but I cannot undertake to take any specific action. We will let the House know later whether we propose to take any action.

Mr. Maudling: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Viscount Hinchingbrooke: I beg to move, as an Amendment to the proposed Schedule, in line 64, at the end, to insert:
(i) vans and delivery vehicles of not more than twenty hundredweights unladen weight.
Perhaps it would be for the convenience of the Committee for the three following Amendments to be considered at the same time: To insert at the end of line 64:
(i) vehicles specially constructed for the carriage of abnormal indivisible loads (within the meaning of the Transport Act, 1947).
(i) vehicles specially constructed for the carriage of bulk liquids.
(i) vehicles specially constructed for the carriage of felled timber.
As the Committee knows, and has been told repeatedly by the Chancellor of the Exchequer and right hon. Gentlemen on the Front Bench opposite, the inspiration of this tax is the desire to compress cer-


tain goods vehicles in this country and to clear the roads of them and force them overseas to be sold. With that knowledge in mind, my hon. Friends and I have had a look at the list of exemptions in paragraph (3) of the Schedule to see how comprehensive it is. There are certain items there clearly which fall into the general picture of what the Chancellor of the Exchequer desires. For example, travelling lavatories and wash places are not attractive to export. Caravans, too, I suppose, come into that category. At any rate, the Government's housing programme is so bad that for the moment caravans have to be excluded.
4.30 a.m.
We wondered whether the list was as comprehensive as it could be, and have decided it is not by any means. One of the most important types of goods vehicles vital to the essential services of the country not readily available is the one I am moving to exclude—the 20 cwt. van. These are not vehicles one sees in France, Italy or Germany coming from British factories. They are not vehicles which compete easily with American vehicles of the same type in the Colonial Empire and the Dominions. They are vehicles essentially constructed for British roads, very easily driven, easily turned, economical on petrol, and connected with a vital industry, namely the distribution of goods and services, We think it strange that the Government should not wish to exclude them from purchase tax.
We consider it may be part of the general policy of the Government to render the distribution services of the country rather more expensive by charging Purchase Tax on these vehicles, thus softening up the distributing industry of the country and making it ripe for the nationalisation proposals of the Labour Party. The intention of the Opposition is to aid the small traders of the country, to do whatever is possible to cheapen their costs, and to see that goods and services are distributed to the people at the lowest possible price. Therefore, we have selected this essential vehicle and make a very strong request, which will be backed if necessary by a Division in due course, that this most important of all vehicles in the distribution services of this country shall be kept free of Purchase Tax.

Sir A. Hudson: As we are dealing with these Amendments together, Sir Charles, may I ask whether we can discuss the Amendment dealing with vehicles specially constructed for the carrying of bulk liquids?

The Deputy-Chairman: If the Amendment dealing with the carriage of bulk liquids is successfully resisted I shall call the other Amendment in the name of the hon. Member for Altrincham and Sale (Mr. Erroll).

Sir A. Hudson: My Amendment deals with vehicles constructed for that purpose. I was under the impression that the Amendment of the hon. Member for Altrincham and Sale was covered by it.

The Deputy-Chairman: I do not think it is. That is why, if this Amendment is turned down, I shall call the one by the hon. Member for Altrincham and Sale.

Sir A. Hudson: What I want to say about vehicles specially constructed for the carriage of bulk liquids is that the object of Purchase Tax on commercial vehicles is to prevent an excessive volume of home sales, and to promote sales abroad. No one is going to suggest that an undue number of these highly specialised vehicles is being bought at present, or has been bought at any time. They are only bought by such people as oil firms and firms engaged in the bulk carriage of milk. I would remind the Committee that they are excluded traffic under the Transport Act of 1947. These vehicles are mostly used for milk. They are also used for the carriage of petrol. Therefore, if we are going to put Purchase Tax on them it will be, in the case of milk, an additional tax on food and, in the case of petrol, an additional tax on transport for no particular advantage.
There is only one more point which I wish to make. It is that it should be noted that in regard to these tank vehicles a number of private companies own railway tank wagons, upon which there is no Purchase Tax. It seems rather absurd that for the same type of vehicles, those running on the railway carry no Purchase Tax while those which run on the roads bear Purchase Tax. There is one other small thing which comes in later on the Amendment of my hon. Friend. I am told that more and more of these tank


vehicles are being made on the chassis-less principle and, therefore, more and more will the Commissioners mentioned in the Schedule have difficulty in discovering how much such vehicles will be subject to Petrol Duty.

Mr. Reader Harris: I want to put in a special word for the exclusion from tax of those vehicles specially designed and built for the carriage of felled timber. First, their use is extremely limited. A vehicle for carrying these long trees cannot be used for anything else; they do not consist of anything much except a chassis. Secondly, they have no export value, or very little; thirdly, they do not compete with the Road Haulage Executive traffic under the provisions of the Transport Act; and, fourthly, this type of traffic is not carried by the railways. At least, felled timber is sometimes carried by the railways, but usually by road on these specially built vehicles.

Mr. Renton: I wish to refer to the traffics known as abnormal indivisible loads—[AN HON. MEMBER: "Like the Government."] I agree with part of that, but we have yet to see if they are indivisible. These traffics are excluded traffics in that, under the provisions of the Transport Act, they cannot be nationalised and for the very simple reason that the loads carried are the very big bulk loads which will not go through the railway tunnels and have to be put on these enormous vehicles. Hon. Members will have seen them carrying, perhaps, a ship's propellor, or a huge boiler, and so on, and there are very few of these specially constructed vehicles in this country for the carriage of these loads.
I have never heard that there is very much of an export trade for these vehicles. They are very costly indeed, and that is one reason why there are so few of them. If a one-third Purchase Tax is added to their cost, then vehicles which at present cost £5,000 to £12,000 will go up to £7,000 to £18,000, and the very valuable traffics—which are valuable to the export trade—will rise in price as well.
There is a further point; these unusual vehicles do a very great service for the shipping industry, especially in emergency. They enable a quick turn round

of ships, and are, therefore, extremely valuable to the export drive. This is a strong case from the point of view of the Government's own intentions, and the Government have nothing to fear about the rapid extension of the capital investment programme if this request is granted.
I support the plea of my hon. Friend for the small shopkeepers' vehicles, not only because I have the honour to be his Member of Parliament but also because in the constituency which he and I know so well, the traders have complained to me—and I have here a letter from the Huntingdon Chamber of Trade—of the very great difficulty that they have experienced in the last three years in getting delivery of the small vans, especially the very small eight-cwt. vans. I have had forwarded to me a copy of a letter from Commer Cars Ltd., well-known manufacturers of these vans. It states
We must explain that our eight-cwt. van is extremely popular overseas and that the number of vehicles of this type which have been available for the home market since the end of the war is extremely small. In fact, we recently completed a period of over 10 months in which no eight-cwt. vans were allocated to the home market.
The point is that no Purchase Tax is necessary to secure a supply of vans to the overseas market. No Purchase Tax is necessary to deprive the home market of vans, because the home market is already deprived of vans. The only effect of the tax will be to increase the price of those very few vans which do reach the home market.

Mr. Pargiter: I am rather interested in some of the arguments developed. They would appear to be something of a war of attrition to see just how little would be left in Purchase Tax anyhow. The vehicle referred to for carrying bulk liquids is very largely nowadays a chassis-less type than a tractor type of vehicle and very easily discernible for tax purposes. The other is a normal type of chassis-construction which has a tank on it. That is the only alternative type to the chassis-less type. I am at a loss to understand some of these references. I thought hon. Members, in supporting this Amendment, would give a much clearer description of these extraordinary types of vehicles. One type, with which I might have some sympathy, is the very heavy one, of which there


are very few and which is designed for indivisible bulk loads. There are not so many of these, and I doubt very much if they would have very much effect on the export market or the home market or even generally upon the amount of capital invested.
The 20-cwt. unloaded vans seem to have been a little confused because another hon. Member referred to the eight-cwt. vans. This vehicle has a very ordinary type of chassis used for either the production of light cars or for van purposes. There is no doubt that the Chancellor is quite entitled to see that as many of that type of chassis are diverted overseas as he possibly can. I see no case at all for the Amendment. Out of all this, in the absence of a much clearer description of what these very special vehicles are, apart from the one which is easily discernible for carrying very heavy loads, I can see no useful purpose in accepting this proposal, if we accept the principle that these vehicles are to be subject to tax.

Sir T. Moore: I cannot believe the Government realise the full implication of this question. The Government party claim to be a party of culture, and yet in this Clause they are doing their very best to stifle one of the main methods by which culture can be achieved. I refer, of course, to books. Vans of this character are essentially the type of vans which are used to deliver, distribute, and collect books. There are many hon. Members on the opposite side of the Committee, as well as on this side, who have contributed very largely to our literature. Surely they should understand what they are doing, and that is to threaten their future livelihood should they agree to this Amendment being refused.
4.45 a.m.
The Chancellor himself is a man of letters. I frequently listen to some of his speeches at functions far removed from this unhappy assembly at this hour of the morning. I have rejoiced in them and have been encouraged and exalted by some of the more charitable statements of his. For these special reasons and for the benefit of the reading public as a whole—and the reading community, I am glad to say, is growing, though they do not pay enough for their books—I think the Chancellor would really have sound justification for accepting this Amendment in the name of the cultured

public, the public as a whole and those of his own party who are still endeavouring to be hopeful authors.

Mr. Jay: I am sorry the hon. and gallant Member for Ayr (Sir T. Moore) is feeling so unhappy, but I shall be happy to try to meet his argument. As all sorts and different aspects of vehicles have been suggested for exemption in this Amendment I will deal with them one by one.
First, let me refer to the light vans mentioned by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). I think there is less a case for exempting this particular class than for most of the rest which one could select, from this list. It is, in fact, the light type of van which has most increased in the last few years and has contributed the largest part to the excess investment over the target which was one of the reasons for introducing this tax. Whether hon. Members agree with the general policy or not—and that is something which we cannot discuss now—I do not think it could possibly be defensible that they accept the rest of the taxes and select this particular class of vehicle for exemption.

Viscount Hinchingbrooke: Has the hon. Gentleman any idea what the Purchase Tax yields on this particular type of vehicle?

Mr. Jay: The exemption of this class would give us something like £3 million or £3,500,000; that shows it is a very numerous class of vehicle. They are a cheaper type of vehicle and, therefore, the proportional burden of tax per vehicle is also the lightest in this case.
Secondly, the vehicles specially constructed for the carriage of abnormal indivisible loads were mentioned, and it is true, as the hon. Member for Huntingdon (Mr. Renton) said, that those vehicles are few; but they are, I understand, in the great majority of cases, multi-wheeled trailer vehicles and a large part of the vehicle in terms of value is, in fact, accounted for by the trailer. Under the present scheme of tax all trailers, whether of the articular or semi-trailer type are now exempt and, therefore, tax has in fact already been relieved to a very considerable extent on those multi-wheeled trailer vehicles. The only section which still remains subject to tax is


the chassis of the motive unit, and since that is a general-purpose road haulage vehicle, there is, I think, no good case for exempting that part of the motive unit.
Thirdly, it was argued that we should exempt vehicles constructed for the carriage of bulk liquids. It was the special case of those vehicles which was one of the main reasons on account of which we decided to make the change from the vehicle to the chassis. In the case of these vehicles carrying petrol, milk and so forth, a high proportion of the cost of the total vehicle is accounted for by the superstructure, so that the tax as originally introduced would, I think, have borne rather hardly on these vehicles. For that very reason, following the transference of the tax, the main part of the vehicle is exempt. We have, therefore, gone so far to meet the case of the liquid carrying vehicles that there is really no case for the complete exemption.
Finally, the case of the timber carrying vehicle was raised. In almost all cases they are trailer vehicles, and the trailer is now exempt. The only part of the vehicle now subject to tax is the chassis of the motive unit which is, like other motive units, a general purpose road haulage vehicle. As such, we think it should equally be subject to tax with the rest of the vehicles of that type. We cannot, therefore, ask the Committee to include any of these special types among the exemptions.

Mr. P. Thorneycroft: I think I was right earlier in our discussion to ask the Government to disclose one single consistent principle upon which they could say any vehicle was excluded from the tax or included within the mischief of the Schedule. As our discussions have gone on it has become perfectly obvious that the right hon. and learned Gentleman excludes and includes vehicles on a purely arbitrary basis. Originally it was said that this tax was a weapon to drive vehicles into the export market. Now we have heard the case put forward for the tax on vehicles concerned with the transport of indivisible loads. It was not even suggested in the argument that the tax was designed so that we should export all these vehicles. I am glad it was not, for they are absolutely vital to our export trade. They are concerned in moving

valuable and very heavy loads to the ports.
Next, timber carrying vehicles. I thought dollar timber was a problem today. I thought the Government intended to do everything possible to encourage the use of home grown timber from our forests. It would be difficult to find anything sillier or less consistent with what the right hon. and learned Gentleman is always pretending he is trying to do.
The last point is perhaps the most important. [Interruption.] I am not going to be hurried. It is no choice of ours that matters of very great importance to millions of our fellow countrymen are being discussed at this hour of the morning. It is the Government who have decided that business should be taken at this hour and in this way. I very much recommend hon. Members opposite to obey the instructions which they are receiving, by signs, from the Chancellor in this matter. One of my hon. Friends says the Chancellor should put a tax on them.
The most important of this series is the shopkeepers' Amendment. It is an Amendment which is designed to prevent this tax of 33⅓ per cent. from falling upon the delivery vans of the shopkeepers of this country. They are already up against quite a lot of things. It is now proposed to tax them to the tune of another £3½ million, if I got the figure right.
It may be that not a large report will come out about our discussions at this moment, but we shall make certain that the Financial Secretary's proud intention to take another £3½ million out of the shopkeepers is given the maximum publicity. It does seem an extraordinary thing that a Government which is always talking about bringing down the cost of distribution should spend most of its time in this Budget in pushing the costs of distribution up. We shall divide on this Amendment to mark our disapproval of this policy.

Mr. James Hudson: I want to know from hon. Gentlemen opposite whether the subject of their Amendment has been fully covered by their references to milk. I heard hon Gentlemen saying a good deal about the failure of the Government to meet the situation,


and I heard the anxiety of the hon. Member for Monmouth (Mr. P. Thorneycroft) about the small shopkeepers. But the bulk liquid I have seen being carried about by these vehicles was neither petrol nor milk. I am wondering before we part with this Amendment whether hon. Gentlemen would like to say what they have mostly in their minds.

Mr. P. Thorneycroft: We intended to include milk, petrol, Guinness, and, if necessary, Bristol cream.

Mr. N. Macpherson: One important point that has not been made yet is the effect on the efficiency of deliveries. So many people in my constituency, which is a rural one, are finding it difficult at the present time in getting delivery vans to replace the ones which are falling to pieces. If sufficient vans are not made available the efficiency of distribution is going to be badly

affected. The Financial Secretary said that the saving would be £3½ million. On what basis was that calculated? If it was calculated on the number of vans actually being delivered at present, surely the whole purpose of this manoeuvre is to keep down the number.

If the Chancellor hopes to reduce the number of vans then the saving is not £3½ million but something less. This is typical of the whole attitude of the Government in this problem. They do not really know whether it is for reasons of revenue or to cut down the number of vans. They do not know what the effect of reducing the number will be, but I can tell them that it is going to be a very serious thing indeed for the countryside.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 175; Noes, 199.

Division No. 46.]
AYES
[5.2 a.m.


Aitken, W. T.
Foster, J. G.
Macpherson, N. (Dumfries)


Alport, C. J. M.
Fraser, Hon. H. C. P. (Stone)
Maitland, Comdr. J. W.


Amory, D. Heathcoat (Tiverton)
Galbraith, Cmdr. T. O. (Pollok)
Marlowe, A. A. H.


Arbuthnot, John
Galbraith, T. G. D. (Hillhead)
Marshall, D. (Bodmin)


Ashton, H. (Chelmsford)
Gates, Maj. E. E.
Marshall, S. H. (Sutton)


Astor, Hon. M.
Gridley, Sir A.
Maude, A. E. U. (Ealing, S.)


Baldock, J. M.
Grimston, Hon. J. (St. Albans)
Maudling, R.


Baldwin, A. E.
Grimston, R. V. (Westbury)
Mellor, Sir J.


Banks, Col. C.
Harris, F. W. (Croydon, N.)
Moore, Lt.-Col. Sir T.


Baxter, A. B.
Harris, R. R. (Heston)
Morrison, Maj. J. G. (Salisbury)


Beamish, Maj. T. V. H.
Harvey, Air-Codre. A. V. (Macclesfield)
Morrison, Rt. Hon. W. S. (Cirencester)


Bell, R. M.
Hicks-Beach, Maj. W W
Nabarro, G.


Bennett, R. F. B. (Gosport)
Higgs, J. M. C.
Nicholls, H.


Birch, Nigel
Hill, Mrs. E. (Wythenshawe)
Nield, B. (Chester)


Bishop, F. P.
Hill, Dr. C. (Luton)
Nutting, Anthony


Black, C. W.
Hinchingbrooke, Viscount
Oakshott, H. D.


Boyd-Carpenter, J. A.
Hirst, Geoffrey
Odey, G. W.


Bracken, Rt. Hon. Brendan
Hollis, M. C.
Ormsby-Gore, Hon. W. D.


Braine, B.
Holmes, Sir J. Stanley (Harwich)
Perkins, W. R. D.


Braithwaite, Lt.-Comdr. J. G.
Hopkinson, H. L. D'A.
Peto, Brig. C. H. M


Bromley-Davenport, Lt.-Col. W.
Hornsby-Smith, Miss P.
Powell, J. Enoch


Brooke, H. (Hampstead)
Howard, G. R. (St. Ives)
Prescott, Stanley


Browne, J. N. (Govan)
Howard, S. G. (Cambridgeshire)
Price, H. A. (Lewisham, W.)


Buchan-Hepburn, P. G. T.
Hudson, Sir Austin (Lewisham, N.)
Profumo, J. D.


Bullock, Capt. M.
Hudson, W. R. A. (Hull, N.)
Raikes, H. V.


Burden, Squadron-Leader F. A.
Hulbert, Wing-Cdr. N. J.
Redmayne, M.


Carr, L. R. (Mitcham)
Hutchinson, Geoffrey (Ilford, N.)
Renton, D. L. M.


Channon, H.
Hyde, H. M.
Robinson, J. Roland (Blackpool, S)


Clarke, Col. R. S. (East Grinstead)
Hylton-Foster, H. B.
Robson-Brown, W. (Esher)


Clarke, Brig. T. H. (Portsmouth, W.)
Jones, A. (Hall Green)
Rodgers, John (Sevenoaks)


Colegate, A.
Kaberry, D.
Roper, Sir H.


Cooper, A. E. (Ilford, S.)
Langford-Holt, J.
Russell, R. S.


Corbett, Lieut.-Col. U. (Ludlow)
Leather, E. H. C.
Ryder, Capt. R. E. D.


Craddock, G. B. (Spelthorne)
Legge-Bourke, Maj. E. A. H.
Scott, Donald


Cranborne, Viscount
Lindsay, Martin
Smith, E. Martin (Grantham)


Crosthwaite-Eyre, Col. O. E.
Llewellyn, D.
Smithers, Peter H. B. (Winchester)


Crouch, R. F.
Lloyd, Rt. Hon. G. (King's Norton)
Smithers, Sir W. (Orpington)


Crowder, F. P. (Ruislip-Northwood)
Lloyd, Selwyn (Wirral)
Smyth, Brig. J. G. (Norwood)


Darling, Sir W. Y. (Edinburgh, S.)
Lockwood, Lt.-Col. J. C.
Soames, Capt. C.


Davidson, Viscountess
Longden, G. J. M. (Herts, S. W.)
Spearman, A. C. M.


de Chair, S.
Lucas, P. B. (Brentford)
Spence, H. R. (Aberdeenshire, W.)


Deedes, W. F.
Lucas-Tooth, Sir H.
Spens, Sir P. (Kensington, S.)


Digby, S. Wingfield
Lyttelton, Rt. Hon. O.
Stanley, Capt. Hon. R. (N. Fylde)


Drayson, G. B.
McCorquodale, Rt. Hon. M. S.
Stevens, G. P.


Drewe, C.
Macdonald, Sir P. (I. of Wight)
Strauss, Henry (Norwich, S.)


Dugdale, Maj. Sir T. (Richmond)
Mackeson, Brig. H. R.
Stuart, Rt. Hon. J. (Moray)


Duthie, W. S.
McKie, J. H. (Galloway)
Summers, G. S.


Erroll, F. J.
Maclay, Hon. J. S.
Sutcliffe, H.


Fisher, Nigel
MacLeod, Iain (Enfield, W.)
Taylor, C. S. (Eastbourne)




Taylor, W. J. (Bradford, N.)
Vaughan-Morgan, J K.
Wheatley, Major M. J. (Poole)


Teeling, William
Vosper, D. F.
Williams, Gerald (Tonbridge)


Thomas, J. P. L. (Hereford)
Wakefield, E. B. (Derbyshire, W.)
Williams, Sir H. G. (Croydon, E.)


Thompson, R. H. M. (Croydon, W.)
Wakefield, Sir W. W. (St. Marylebone)
Wills, G.


Thorneycroft, G. E. P. (Monmouth)
Walker-Smith, D. C.
Wilson, Geoffrey (Truro)


Thornton-Kemsley, C. N.
Ward, Hon. G. R. (Worcester)
Wood, Hon. R.


Tilney, John
Ward, Miss I. (Tynemouth)
York, C.


Touche, G. C.
Waterhouse, Capt, C.
Young, Sir A. S. L.


Turton, R. H
Watkinson, H.
TELLERS FOR THE AYES:


Vane, W. M. F.
Webbe, Sir H. (London)
Mr. Studholme and Major Conant.




NOES


Acland, Sir Richard
Griffiths, W. D. (Exchange)
Pearson, A.


Adams, Richard
Gunter, R. J.
Peart, T. F


Albu, A. H.
Hale, J. (Rochdale)
Poole, Cecil


Allen, A. C. (Bosworth)
Hale, Leslie (Oldham, W.)
Popplewell, E.


Awbery, S. S.
Hall, J. (Gateshead, W.)
Price, M. Philips (Gloucestershire, W.)


Ayles, W. H.
Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
Proctor, W. T.


Bacon, Miss A.
Hamilton, W. W.
Pursey, Comdr. H.


Baird, J.
Hannan, W.
Rankin, J.


Bartley, P.
Hardman, D. R.
Rees, Mrs. D


Beswick, F.
Hardy, E. A.
Reeves, J.


Bing, G. H. C.
Hargreaves, A
Reid, T. (Swindon)


Blackburn, A. R.
Harrison, J.
Reid, W. (Camlachie)


Blenkinsop, A.
Hastings, Dr. Somerville
Richards, R.


Boardman, H
Hayman, F. H.
Robens, A.


Booth, A.
Herbison, Miss M.
Roberts, Goronwy (Caernarvonshire)


Bowles, F. G. (Nuneaton)
Hewitson, Capt. M
Robertson, J. J. (Berwick)


Braddock, Mrs. E. M
Hobson, C. R.
Rogers, G. H. R. (Kensington, N.)


Brook, D. (Halifax)
Holmes, H. E (Hemsworth)
Ross, William (Kilmarnock)


Brooks, T. J. (Normanton)
Houghton, Douglas
Royle, C.


Broughton, Dr. A. D. D.
Hudson, J. H. (Ealing, N)
Shackleton, E. A. A.


Brown, T. J. (Ince)
Hughes, Emrys (S. Ayr)
Silverman, J. (Erdington)


Burton, Miss E.
Hughes, Hector (Aberdeen, N.)
Silverman, S. S. (Nelson)


Butler, H. W. (Hackney, S.)
Hughes, Moelwyn (Islington, N.)
Simmons, C. J.


Champion, A. J.
Hynd, H. (Accrington)
Slater, J.


Chetwynd, G. R
Hynd, J. B. (Attercliffe)
Snow, J. W.


Clunie, J.
Irving, W. J. (Wood Green)
Sorensen, R. W.


Coldrick, W.
Janner, B.
Soskice, Rt. Hon. Sir F.


Collick, P
Jay, D. P. T
Sparks, J. A.


Collindridge, F.
Jenkins, R. H.
Steele, T.


Cooper, G. (Middlesbrough, W.)
Johnson, James (Rugby)
Stewart, Michael (Fulham, E.)


Cooper, J. (Deptford)
Jones, D. T. (Hartlepool)
Stross, Dr. B.


Cove, W. G.
Jones, Jack (Rotherham)
Sylvester, G. O.


Craddock, George (Bradford, S.)
Jones, William Elwyn (Conway)
Taylor, R. J. (Morpeth)


Cripps, Rt. Hon. Sir S
Keenan, W
Thomas, D. E. (Aberdare)


Crosland, C. A. R.
Kenyon, C
Thomas, George (Cardiff)


Cullen, Mrs. A.
Key, Rt. Hon. C. W.
Thomas, I. O. (Wrekin)


Daines, P.
King, H. M.
Thorneycroft, Harry (Clayton)


Darling, G. (Hillsboro')
Kinley, J.
Timmons, J


Davies, A. Edward (Stoke, N.)
Lee, F. (Newton)
Tomney, F.


Davies, Ernest (Enfield, E.)
Lindgren, G. S.
Vernon, Maj W F


Davies, Harold (Leek)
Lipton, Lt.-Col. M.
Viant, S. P.


Davies, S. O. (Merthyr)
Longden, F. (Small Heath)
Wallace, H. W.


Deer, G.
MacColl, J. E.
Watkins, T. E.


Delargy, H. J.
Mackay, R W. G. (Reading, N.)
Weitzman, D.


Dodds, N. N.
McLeavy, F.
Wells, P. L. (Faversham)


Donnelly, D.
MacPherson, Malcolm (Stirling)
Wells, W. T. (Walsall)


Driberg, T. E. N.
Mainwaring, W. H
While, Mrs. E. (E. Flint)


Ede, Rt. Hon. J. C.
Mallalieu, E. L. (Brigg)
While, H. (Derbyshire, N. E.)


Edelman, M.
Mallalieu, J. P. W. (Huddersfield, E.)
Whiteley, Rt. Hon. W


Edwards, John (Brighouse)
Manuel, A. C.
Wilcock, Group-Capt C A. B


Edwards, W. J. (Stepney)
Mellish, R. J.
Wilkes, L.


Evans, Albert (Islington, S. W.)
Messer, F.
Wilkins, W. A.


Evans, E. (Lowestoft)
Mitchison, G. R.
Willey, F. T (Sunderland)


Evans, S. N. (Wednesbury)
Moeran, E. W.
Willey, O. G. (Cleveland)


Ewart, R.
Monslow, W.
Williams, D. J. (Neath)


Fernyhough, E.
Moody, A. S.
Williams, Ronald (Wigan)


Field, Capt. W. J.
Morris, P. (Swansea, W.)
Williams, W. T. (Hammersmith, S.)


Finch, H. J.
Moyle, A.
Wilson, Rt. Hon. J. H (Huyton)


Freeman, J. (Watford)
Mulley, F. W
Winterbottom, I. (Nottingham, C.)


Freeman, Peter (Newport)
Murray, J. D.
Winterbottom, R. E. (Brightside)


Gaitskell, Rt. Hon. H. T. N
Nally, W.
Wise, Major F. J.


Gibson, C. W.
Neal, H.
Woods, Rev. G S


Gordon, Walker, Rt. Hon. P. C.
Orbach, M.
Yates, V. F


Greenwood, A. W. J. (Rossendale)
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Younger, Hon. Kenneth


Greenwood, Rt. Hn. Arthur (Wakefield)
Paling, Will T. (Dewsbury)



Grey, C. F.
Pannell, T. C.
TELLERS FOR THE NOES:


Griffiths, D. (Rother Valley)
Pargiter, G. A.
Mr. Bowden and Mr. Kenneth



Paton, J.
Robinson.


Question put, and agreed to.

Mr. Erroll: I beg to move, in line 64, at the end, to insert:
(j) aircraft refuelling vehicles designed primarily for use only on aerodromes in connection with the refuelling of aircraft.

This Amendment excludes from tax aircraft refuelling units which are commonly known as Bowsers and are to be seen on the aerodromes. They are not road vehicles. In fact, many of them are so constructed that they could not be used on the roads on account of the present regulations for construction and use. Most of them are unlicensed and cannot travel on the roads. It would be appropriate to include them in the Third Schedule where we find:
Industrial and works trucks designed primarily for use in factories, docks, yards, railway stations or warehouses.
If after the word "yard" the word "airfield" were inserted it would enable these vehicles to be exempt.

Air-Commodore Harvey: The Chancellor of the Exchequer has given little, indeed, nothing at all, to the aircraft and aviation industries in this Bill, and I ask him now in our final winding up to be generous and exempt these vehicles. They could not be used outside an airfield because of their size. Furthermore, they are increasing in size and cost. If they are taxed, airfield owners and the Government will instal more ground installations, and it is far more convenient to have mobile fuelling on airfields. I do not know the cost of this concession, but I think it would be little. I would assure the hon. Member for Ealing, North (Mr. J. Hudson) that these vehicles do not carry beer on airfields, not under this Government at any rate. My final plea to the Chancellor of the Exchequer is to be generous and meet us in this modest request before we complete our proceedings.

Sir S. Cripps: I am glad the hon. Gentleman has moved this Amendment because it gives me an opportunity of saying what a very pleasant evening we have all had. I do not think I ever remember a more pleasant and even-tempered

all-night sitting in the House, and I am sure we are all very grateful to the hon. and right hon. Gentlemen opposite for their assistance in bringing about such a happy state of affairs. I suppose in another setting I would have proposed a vote of thanks to the Chairman, seconded by the right hon. Gentle-man opposite. So far as this Amendment is concerned, I think I can satisfy both hon. Gentlemen in their desires by telling them that, according to their own definition of these vehicles, they are not road vehicles and therefore are not subject to tax under this Schedule.

Mr. Erroll: In the circumstances, after a very happy evening, I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Motion made and Question proposed, "That the Schedule, as amended, be added to the Bill."

Captain Waterhouse: In the definitions of the Schedule are the words, "mobile shops." I am informed that there are two forms of mobile shop; one is a large shop in which the shopper goes inside the shop to do his shopping. That vehicle is already exempt. And there is a much smaller shop, which belongs normally to the humbler sort of shopkeeper and at which the humbler sort of people do their shopping. That is a shop in which the display is outside. That shop is not exempt from tax. I ask the Chancellor of the Exchequer to look into this, to see if an alteration of words is necessary to clear away this anomaly.

Sir S. Cripps: I will certainly have a look at the matter the hon. Gentleman mentions. I could not deal with it now because I am not aware of it.

Schedule, as amended, added to the Bill.

Bill reported, with Amendments.

As amended, to be considered upon Monday next, and to be printed [Bill 38].

BRITISH JOURNALISTS (EASTERN EUROPE)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Collindridge.]

5.15 a.m.

Mr. Russell: As this is the first occasion upon which I have been successful in the Ballot for the Adjournment I am sorry that at this hour I am asking those who have to stay to remain for another 20 minutes or half-an-hour. I make no apology for the subject I am raising—the treatment of British journalists by Communist countries, and more particularly the expulsion or exclusion of nine British journalists from certain Communist countries in the last five years. May I recapitulate these nine cases, as they were given to me by the Minister of State in answer to a Question about seven weeks ago?
In 1946, Mr. Derek Selby, a correspondent of the "Sunday Times" was ordered to leave Poland on the grounds that he consistently misrepresented the facts. In 1948, Mr. Alec Collett of the "Daily Telegraph," Mr. Alexander Lawrenson also of the "Daily Telegraph," and Mr. Karl Robson of the "News Chronicle" were refused permission to stay in Czechoslovakia; and Mr. Patrick Smith of the B.B.C. and Mr. Christopher Buckley of the "Daily Telegraph" were refused entry visas to Czechoslovakia. In 1949, Mr. Denis Weaver of the "News Chronicle" was refused an entry visa to Poland, and Mr. Eric Bourne of the Kemsley Press was expelled from Czechoslovakia; and last April, Mr. Vincent Buist, Reuter's correspondent, was expelled from Poland, for "unobjective reporting."

Mr. Bing: Would the hon. Gentleman also deal with the case of "The Times" correspondent in Japan and make it ten?

Mr. Russell: My subject is the treatment of British journalists by Communist countries. I shall be ready at some future occasion, if the hon. and learned Gentleman desires, to argue about Japan, Spain or any other country, but if he will forgive me I shall stick to the question of the Communist countries now.
There is the question of the treatment of these journalists inside the countries—when there were any there—since I understand that the "Daily Worker" is the only British newspaper with a correspondent in Soviet Russia at the present time. There was at all times an iron censorship; all messages sent by the journalists had to go through the post office, and it took a correspondent sometimes many days to find out whether a message had actually been sent, and what was the extent to which it had been mangled by the censor in transmission.
In Poland, officials refuse to speak to foreign correspondents, and Government Departments are particularly bad in procrastinating and in refusing to give information, or they refrain from saying anything until several attempts are made to get it in contradistinction to Soviet Russia where they do say "No" straight away. In Rumania and Bulgaria I gather the censorship is very severe, and only in Hungary of the Iron Curtain countries is it apparently quite easy.
It makes me feel indignant—and I hope it makes other hon. Members of this House, to whatever party they belong, also feel indignant—when our fellow countrymen, of whatever profession or occupation, are badly treated in this way when going about their daily business. Some hon. Members may have been listening last Sunday week to the B.B.C. programme called "Scrap-Book for 1904." One of the incidents recalled was that on the Dogger Bank when the Russian Baltic Fleet, on its way to the Far East, fired on the Hull fishing fleet with the result that one trawler was sunk and two sailors killed. Anyone listening to that programme would have heard the commentator say that public indignation reached white heat, but the Government remained calm. The result, so far as I understand, was that complete satisfaction was obtained, with compensation for the injury. I think it is safe to say that in those days no country, certainly no small country, would have attempted to expel any British journalist except for very sound reasons.
The point at issue is: What can we do to stop what one can only call this ignominious treatment of correspondents, whose only desire is to go about their daily business unhindered? The only


remedy is some kind of reprisal or retaliation. On 4th May I asked the Home Secretary whether he would consider that in conjunction with the Foreign Secretary. His answer was:
No, Sir. We have nothing to hide."—[OFFICIAL REPORT, 4th May, 1950; Vol. 474, c. 1882.]
The same answer was given by the Under-Secretary in answer to the hon. and gallant Member for Macclesfield (Air Commodore Harvey) a few days later. I submit that that is rather beside the point. We may have a great deal to hide, but I trust that anything in the way of official secrets is being kept not only from foreign journalists but from anyone who is not entitled to see or to know them. But I am not suggesting that if we should turn out any journalist from an Iron Curtain country it should be because we had anything to hide. Obviously, we have nothing which we wish to hide in our daily life. I only suggest that such action should be considered as a means to stop the expulsion or exclusion of our journalists from Communist countries, which has been going on for the last five years.
I know that there are difficulties in the way, as there are stationed in this country few Communists accredited to newspapers, as most of the news from this country to Eastern countries is covered by Reuters. But those correspondents, unlike ours when they existed in Communist countries, have complete freedom to go where they like and to send what they like back to their own countries. I suggest that it would be a handicap to Communist propaganda organisations if journalists could not provide the realistic background on which the life of this country is distorted in the Communist Press. I suggest that we ought to make these Communist journalists subject to exactly the same difficulties as are put in the way of our journalists in Communist countries.
We could give consideration to Communist magazines run by Communist countries inside this country. There are—and I am quoting from the "Daily Worker"—"Soviet News," "Soviet Weekly," "Soviet Monitor," "Czechoslovak Newsletter," "New Poland," and "Bulgaria Bulletin." There was, until recently, the "Roumanian News," but that apparently has been banned because

on 3rd March the British Information Office in Bucharest was closed at the request of the Roumanian Government, and on 17th March this year a Note was sent to the Roumanian Government by His Majesty's Government asking that the Information Office attached to the Roumanian Legation in London should be closed and the publication of this paper suspended. I am encouraged by that. If that is an example of a reprisal, I only hope it will go on.
Then, there are various bodies under various names—usually the phrase "Friendship Society" occurs in them. I do not know what powers the Government have to close down bodies like that, but if the Government have no powers I must not pursue that matter. Is it beyond the powers of the Government to consider whether, in making trade agreements with these countries—and we have made several in the last five years—to make it a condition of the agreement that our journalists be given proper treatment in the course of carrying out their daily business?
In reply to the hon. Member for Billericay (Mr. Braine) last week, the Minister of State gave a long list of persons imprisoned, or who had disappeared in Communist-controlled countries since the war. On Monday last, the Under-Secretary, in reply to the Leader of the Liberal Party, said that the Government take a very serious view of a request from the Czechoslovak Government to withdraw the Secretary of the British Embassy. I am glad that the Government do take a serious view of that request, and I hope that this serious view will be followed up by serious action, because that is the only way of making any Communist Government to desist from a request of that kind.
The "Daily Telegraph" two or three days ago stated that the United States Government are threatening to deport from the United States a Greek Communist, who is a correspondent of the "Daily Worker" at Lake Success at the present moment, on the grounds of abusing his privilege of residence. I suggest that we here go on retaliating until we get complete satisfaction and British journalists are given freedom in Communist countries and allowed to send


their messages as Communist journalists can from here.
I do not know whether the Under-Secretary has read a very interesting book, giving an insight into the Communist attitude to this kind of thing, called "The Russian Outlook," by General Sir Giffard Martell. He was head of the British Military Mission to Russia for a year or so during the war, and he got an insight into Communist methods. He wrote this on reprisals:
A reprisal, or threat of reprisal, would be understood at once by Russia. She would not think we were being unduly unpleasant. She would merely think that we had come to our senses at last and would wonder why we had not done so long ago.
That is the opinion of a gentleman who knows what he is talking about so far as Russia is concerned. A leading article in "The Times" recently said that democracies need not have scruples about taking measures against the Communists when the need arises.
On the second page inside the cover of a British passport—unfortunately I have not the exact wording—there is a sentence asking all people who have to handle the passport in a foreign country to let that British person go about his business "without let or hindrance." Unfortunately, that does not apply in these days in Communist countries. I should like to see the time come when, as the result of action taken by this country, not only British journalists but any British traveller travelling with a British passport will be able to go about their business wherever they like without let or hindrance.

5.30 a.m.

The Under-Secretary of State for Foreign Affairs (Mr. Ernest Davies): I think it is as well that this question has been aired, though I will not say that I am grateful to the hon. Gentleman for raising it at this hour of the morning. It is useful that this should have been raised, in view of the fact that, as he pointed out, there have been nine journalists expelled or otherwise prevented from carrying on their normal journalistic activities in two countries—six in Czechoslovakia and three in Poland. It is only in these two countries

that there have been actual expulsions, but in the other countries—in Soviet Russia itself and other countries behind the Iron Curtain—there have been obstacles put in the way of our journalists visiting those countries and acting as correspondents therein. The main method which has been used has been the refusal of re-entry visas.
The Government, understandably, deplore this systematic hampering of the gathering of news. We deplore the methods which are employed to prevent the collection of information and the dissemination of news in those countries and from those countries. The excuses made are that when the journalists are going about their business inside those countries they engage in "unobjective reporting," but our experience of the reporting in the Soviet Press, and that of the satellite countries, is certainly that it is not objective, to say the least. The methods which are being employed are quite clearly preventing a free flow of information, which is normally encouraged by all civilised nations. We think this is an example of how these Governments do not wish to have the full light of criticism thrown upon them because they fear contact with the outside world and because they do not wish to have information about the West disseminated in their own countries.
But, having said that, when we come to the suggestion which has been put forward by the hon. and gallant Member that reprisals should be taken, we part ways with him. I oppose in principle any restrictions on the freedom of access. It is true we do not have freedom of access to news in those countries behind the Iron Curtain, but that is no reason why we should prevent the free gathering of news inside our own country. We, here, have nothing to hide. On the contrary, we want the Iron Curtain to be pierced and to have people behind the Iron Curtain fully informed as to what goes on in this country, even if the information which reaches them through their correspondents here is not completely objective. It is far better they should have some information than none.
We have an entirely different approach to this matter from that of the Iron Curtain countries. We, in this country, treasure our tradition of the freedom of


information, the freedom of the Press, and the freedom of speech, and we think it would be departing from our principles if, at this stage, we put any restrictions whatsoever on the freedom of journalists in this country to move about to collect information and to transmit it to the countries to which they are reporting.
Further, we think that it is far better to allow the collection of news by all types of correspondents, because in the reporting of it one would correct the other, and truth ultimately filters through the sieve of the different accounts which are collected. Our attitude to the freedom of information is that democracy can afford to take a risk in the collection of news, and can offer freedom from any restrictions upon it; whereas, the Communist States, of course, are not willing to take such risks. For that reason, we certainly would reject any suggestion that reprisals should be taken at this stage, or at any stage.
What I would like to ask the hon. Member is: What useful purpose does he really think would be served by retaliation? The hon. Member makes, I think, a mistaken assumption. He assumes that if we engaged in retaliation, then the measures taken against our journalists would be relaxed and it would be easier for our journalists to carry on their work inside the Iron Curtain countries. I cannot accept that assumption. It is not our experience that where reprisals have been taken—and we have been driven to them regretfully—the result has been that the conditions which caused those reprisals to be taken have been relaxed or improved. We would find that we would get engaged in a war of expulsions if we adopted the system of reprisals suggested. We do not think any useful purpose would be served by that means.
Even if we agreed that we should take action against journalists from the Iron Curtain countries in Britain, the question is whether it would be effective, inasmuch as the papers concerned would be in a position to engage British journalists in this country to carry on their work. There are Communists in this country who would be perfectly willing to serve—and there are some who do serve—as correspondents for the foreign Press behind the Iron Curtain, and so to expel foreign Communists or foreign journalists

from this country does not automatically mean that those papers will not have any correspondents in this country and that our reprisals will be effective. These are among the reasons why we reject this matter of reprisals.
The hon. Member also referred to the possibility of taking action against such things as the "Friendship Leagues" and other organisations in this country which he considers to be disseminating Communism. I would like to point out that Communism is not a crime in this country, and we would have no right to take action against anybody for disseminating Communism or carrying on Communist activities as such.

Mr. Russell: I did not suggest it because they were disseminating Communism, but simply as a reprisal.

Mr. Davies: That is even less reason for doing it—in my view far less reason. We have not necessarily the power to take the action he asks us to take in the case of the "Friendship Leagues." They are British clubs and British organisations and we have no grounds for taking any action against them whatsoever so long as they keep within the legal activities which clubs are entitled to.
While I repeat our position, that we deplore the actions which have been taken against British journalists overseas through expulsions, through the refusal of re-entry permits and in other ways, we do not think that the position would be improved by taking reprisals. We think it would be wrong in principle to take them, and we will not take any steps which in any way interfere with the freedom of information and the freedom of the dissemination of news in this country.

Mr. Bing: Could my hon. Friend perhaps deal with a matter which is worrying some of us—the considerable restrictions placed upon "The Times" correspondent in Tokio. Can he make any statement on that?

Mr. Davies: I replied to a question on this point only this Monday. The position is not quite what my hon. and learned Friend appears to think. As I told the House on Monday, the position is simply that the Supreme Commander in Japan drew the attention of the United


Kingdom Liaison Mission there to the fact that he considered that certain statements made by Mr. Hawley were inaccurate statements. We informed "The Times" of this matter but, as I have said to the House, we gave no advice to "The Times" whatever, we made no suggestions of any action that should be taken and, in our view quite rightly, "The Times" has taken no action in regard to the matter. This is a matter between "The Times" newspaper and their correspondent, and we certainly would not take any action to interfere with the freedom of "The Times" correspondents to carry on their normal journalistic activities.

Mr. Russell: Was the Note sent to the Roumanian Government on 17th March a reprisal for their request of 3rd March?

Mr. Davies: That does not quite arise out of this question of journalists. I cannot answer it now. There is a difference between our taking reprisals against Government information offices here. If our Government information offices are closed down in one country and we decide to close their offices down here, that is a different matter from taking reprisals over individuals who are journalists.

5.42 a.m.

Mr. Brendan Bracken: Why do the British Government feel bound to transmit a complaint from General MacArthur to "The Times" newspaper? It seems to me that "The Times" correspondent has kept them pretty fully informed about General MacArthur's feelings, and I think the intervention of the British Government here is altogether wrong. I am amazed that a general so distinguished as General MacArthur should take the trouble to complain about a newspaper correspondent. One of the glories of the American Press is that they send their correspondents everywhere and expect them to have the right to speak their minds freely and to write as they like.
I consider it is a form of pressure which is altogether unworthy of the British Government to transmit a complaint from General MacArthur to "The Times."
The British Government is not a post office for General MacArthur. I do not

like this, and it seems to me to be an interference with the rights of the Press. I feel very strongly about this matter. I hope this will not occur again. If General MacArthur has any complaint to make he can make it to his own Government, the Government of the United States, and perhaps they will will transmit it to the British Government. I very much doubt whether the American Government would approach our Government direct in this matter.
I hope our Government are not going to adopt this attitude of compliance with General MacArthur in his complaint about a correspondent. I do not know the rights or wrongs of this business, but I thoroughly object to the British Government acting as the bearer of a complaint from the commanding general in Japan to "The Times," or any other newspaper in this country. I am very glad to see that "The Times" has taken a resolute line about this matter, and I think that most British newspapers thoroughly endorse their independence.

Mr. Davies: We also endorse the independence of "The Times" and all other newspapers in this country. I think the right hon. Gentleman is being a little less than fair in this matter. After all, General MacArthur is the Supreme Commander in Japan, we have a Liaison Mission there, and he made his complaint to us. We thought it was only courteous for us to pass on the information we had received. As I have said quite clearly, we took no action in the matter other than to inform "The Times" of what General MacArthur had informed us. I think it was quite courteous to do that, and quite reasonable to do that. We gave no advice and we took no further action. We were one authority dealing with another authority, and when that authority makes a complaint to us about something it is only fair to inform the other people that a complaint has been made, without exercising any pressure and without interfering with the independence of the party to whom we passed the complaint.

5.44 a.m.

Mr. Harold Davies: Many of us on this side of the House agree with the right hon. Member for Bournemouth, East and Christchurch (Mr. Bracken). We do not feel that it was the duty of the


British Government to pass on this complaint, although that it was, if you like, a duty of General MacArthur. Finally, I would say in the half-minute that is left that on both sides of the House we welcome the objective point of view that the Foreign Office have expressed in this Debate, because we must maintain the complete freedom of the Press, whoever the journalists may represent.

The Question having been proposed after Ten o'Clock on Thursday evening and the Debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Fourteen Minutes to Six o'Clock a.m.